SYDNEY — Australia’s benchmark share index closed lower for a second consecutive session Friday, falling 38 points, or 0.44%, to 8,664.0, as a deepening global bond sell-off and continued strength in oil prices weighed on investor sentiment heading into next week’s Reserve Bank of Australia interest rate decision.
The S&P/ASX 200 opened Friday at 8,757.80 before sliding through the morning session, dropping to 8,663 points by 10:30 a.m. local time. Of the index’s 11 sectors, all but one traded lower, with the materials sector falling more than 1%. The decline followed a global bond market sell-off that pushed U.S. Treasury yields to multi-decade highs overnight, adding to concerns about inflation and the broader path of interest rates worldwide.
Friday’s losses extended a sharper pullback recorded Thursday, when the ASX 200 fell 63.3 points, or 0.72%, to close at 8,702, with the broader All Ordinaries index down 0.66% to 8,897. Thursday’s decline came as oil prices surged above $100 a barrel, compounding steep losses on Wall Street tied to continued selling in technology and artificial intelligence-linked stocks. The Australian dollar finished Thursday’s session little changed at 70.38 U.S. cents. Market breadth was notably weak that day, with declining stocks outnumbering advancers by 695 to 376, and 386 stocks finishing unchanged.
Individual stock moves on Thursday reflected the broader market’s uneven tone. Premier Investments, owner of the Peter Alexander and Smiggle brands and holder of a 25% stake in appliance maker Breville, led gainers with a 7.53% advance, even as the company flagged ongoing concerns about a soft retail sector. Washington H. Soul Pattinson added 6.24% to close at $48.35, while BSP Financial Group rose 5.90% to $7.81. On the losing side, buy-now-pay-later provider Zip Co tumbled 10.27% to $2.01 after the company reported its short sale position following Wednesday’s closing bell, while Liontown Resources fell 7.38% and Nine Entertainment dropped 6.21%, with UBS analysts warning the media company could face near-term revenue challenges following the recent introduction of an ad-supported subscription tier. Mining giants BHP and Rio Tinto bucked the broader downward trend Thursday, rising 1.4% and 0.8%, respectively, as copper prices firmed on reports of Chinese stockpiling ahead of upcoming holidays.
The weaker tone across Australian equities this week has coincided with signs of broader economic strain domestically. National Australia Bank’s latest quarterly business survey found business conditions had fallen to their first negative reading since September 2020, with the bank’s index recording a three-point decline. Sales margins deteriorated to their lowest level since June 2020, a result NAB attributed to declining profitability and what it described as a “particularly challenging cost environment.” Separately, struggling property developer Bathla is expected to cease construction across all of its sites, after 213 staff were stood down in early September and other construction projects were suspended in the wake of a broader corporate deal affecting the company.
Australia’s labour market data, released Thursday, added a further layer of complexity to the outlook. The Australian Bureau of Statistics reported the unemployment rate rose to 4.6% in August, up from 4.5% in July, even as total employment increased by 39,500 people. That employment growth came entirely from part-time positions, while full-time employment actually declined by 6,300 over the same period, and the labour force participation rate rose to 67.1%. Economists have suggested the combination of rising unemployment alongside employment growth points to a gradually easing labour market, a dynamic that could give the Reserve Bank additional grounds to hold interest rates steady at its upcoming meeting. Major Australian banks reflected the cautious mood Thursday, with Commonwealth Bank of Australia falling 0.84% to $149.775 and Westpac Banking Corp down 1.32% to $34.30.
The Reserve Bank is scheduled to announce its next interest rate decision on Tuesday, September 29, a meeting that has taken on added significance given the mixed signals emerging from this week’s economic data and the broader volatility across global bond and equity markets. Separately, the central bank has faced internal labor tension of its own in recent weeks. The Finance Sector Union criticized RBA leadership for reoffering the same enterprise bargaining pay proposal that staff had already voted down in July, a 9.5% pay increase spread across three years. FSU secretary Julia Angrisano said the central bank’s approach reflected poorly on its treatment of its own workforce. “The RBA are not respecting the collective voice of their workers by putting forward the same pay offer that was rejected in a ballot just over two months ago,” Angrisano said. “The RBA should be a model employer, but instead they are treating their staff like mugs.”
Beyond domestic developments, global political and economic news continued shaping sentiment Friday. French President Emmanuel Macron, addressing a wide-ranging television interview, said a proposed U.S. ban on diesel exports would be “catastrophic,” both for the global economy and for the U.S. economy specifically, adding another point of international economic uncertainty to a week already dominated by volatility in bond markets, oil prices and equity trading worldwide.
With the ASX 200 now down roughly 5% over the past month and the Reserve Bank’s rate decision just days away, investors are likely to remain focused on how incoming economic data and global bond market conditions evolve heading into next week, as markets continue weighing the competing signals from a softening domestic labour market against the inflationary pressure stemming from elevated oil prices and rising global bond yields.
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