Australian stocks hit two-month low on mining losses
The S&P/ASX 200 index dropped 0.9% to close at 8,741.20 points on Friday. This marks the lowest closing level since July 2. The weekly decline reached 2.1%, the steepest drop since mid-March.
Australian equities ended the week at a more than two-month low. Miners led the decline as commodity prices weakened. BHP fell 4.1%, recording its worst session since mid-June. Rio Tinto shed 3.5% in the same period. The broader S&P/ASX 200 index lost 0.9% on Friday to finish at 8,741.20 points. This represents the lowest close since July 2. The index dropped 2.1% for the week, its steepest decline since mid-March.
Global investors moved away from risk assets. Concerns over higher oil prices and persistent inflation drove the shift. The Middle East conflict raised fears of prolonged supply disruptions. Oil prices held above $100 a barrel despite easing on Friday. Investors remained cautious about potential policy tightening. The Reserve Bank of Australia sent hawkish signals during the week. Markets now price in 32 basis points of rate hikes by November. Another 39 basis points are expected for December.
Mining sector leads market decline
The heavyweight miners sector slumped 3.7%. This was its steepest drop since June 19. Copper prices fell after reports indicated the White House has not decided on refined copper tariffs. Officials worry that higher metal prices could raise manufacturing costs. Lithium miners suffered significant losses. Liontown shares tumbled 8.6% on Friday. PLS shares fell 7.4% in the same session. These drops weighed heavily on the overall market performance.
Bond yields hit multi-year highs
A global bond selloff pushed Australian government bond yields higher. Both short-term and long-term yields jumped over the 5% mark. These levels are the highest seen since mid-2011. The move reflects heightened inflation concerns. Financial stocks provided some support to the market. The sector advanced 1.1% on Friday. This was its best session in nearly two weeks. It followed three consecutive sessions of losses.
Investors retreat to defensive assets
Portfolio managers noted a steep risk-off mode in the market. Investors are retreating to cash and defensive assets. They await stability in the macroeconomic outlook. Luke Winchester of Merewether Capital described the move as unsurprising. The market reaction aligns with data from GN auto markets/indices: stock index tracking. The decline in Australian shares mirrors broader global sentiment. Investors prioritize capital preservation over growth in the current environment.
