Australian shares tumbled to a two-week low on Monday, led by a sell-off in banks and technology firms after a surprise jump in US jobs data dashed hopes for an imminent interest rate cut from the Federal Reserve.

The S&P/ASX 200 Index closed down 102.2 points, or 1.2 per cent, to 8191.20, tracking a sell-off on Wall Street, with nine of the 11 industry groups finishing in the red. The All Ordinaries lost 1.3 per cent.

That’s after US non-farm payrolls data showed the world’s largest economy added 256,000 jobs last month versus expectations for 164,000, bolstering the case for a pause in rate cuts. Bank of America deputy US chief economist Aditya Bhave said the possibility of an interest rate hike should also be considered.

“Our base case has the Fed on an extended hold,” Mr Bhave said. “But we think the risks for the next move are skewed toward a hike. The bar is high since the Fed still thinks rates are restrictive. But hikes will likely be in play if year-on-year core inflation exceeds 3 per cent, or long-term inflation expectations become unanchored.”

Losses on Wall Street fed through to the ASX, as traders raced to sell-off some of the index’s most expensive banks. Commonwealth Bank fell 2.1 per cent to $152.76, NAB was 1.9 per cent lower at $37.22, Westpac declined 2.2 per cent to $31.87 and ANZ dipped 1.3 per cent to $28.90.

Rate sensitive technology stocks also posted large losses. Software giant WiseTech sank 3.6 per cent to $121.02 and NextDC fell 4 per cent to $14.79.

Elsewhere, retail stocks were sold off after a trading update from Myer disappointed the market, sending the shares crashing 23.1 per cent to 88¢. Premier Investments posted the index’s biggest losses, falling 15.9 per cent to $27.78.

Meanwhile, a rally in energy stocks gained momentum, after Brent crude climbed to a four-month high of $US81.25 a barrel after further US sanctions against Russia. Shares of Woodside rallied 2.5 per cent to $2.02 and Santos rose 2.2 per cent to $7.12.

Alongside equities, changing expectations around US interest rate movements continued to weigh on the Australian dollar. The battered currency neared five-year lows on Monday, trading at $US61.34, as the US dollar strengthened. National Australia Bank analysts said the ongoing decline could compound short-term inflationary pressures.

Stocks in focus

On the ASX, Monday’s biggest gainer was The Star Entertainment, which rallied 13.6 per cent to 13¢ as Chinese investor Xingchun Wang disclosed a 5.52 per cent stake in the embattled casino operator. The shares crashed 42 per cent last week after warning it had just $79 million in cash on hand, while lenders expressed a loss of confidence.

Energy Transition Minerals leapt 20.3 per cent to 9¢ after the miner, which is embroiled in a legal dispute with Greenland over its plan to build a rare earths mine, appointed former foreign minister Julie Bishop as an adviser.

Netwealth tumbled 9.9 per cent to close at $27.36 after Citi analysts downgraded the stock to sell and cut its earnings estimates for the wealth platform to reflect negative market movements in December.

Novonix shares fell 5.6 per cent to 68¢ after the US Department of Energy did not permit the battery materials producer to receive certain tax credits that would have made it eligible for an additional loan to fund its Tennessee facility.

And, NRW Holdings closed 9.5 per cent lower at $3.45 after the company announced the resignation of chief financial officer Richard Simons.