Australian share market books four-day losing streak on US rates pushback

After a negative lead from Wall Street, the share market extended its losses on Wednesday with energy stocks weighing on the benchmark.

After a negative lead from Wall Street, the share market extended its losses on Wednesday with energy, material and real estate stocks weighing on the benchmark. Picture: NCA NewsWire / Gaye Gerard

Australian shares booked a four-day losing streak on Wednesday, tracking losses on Wall Street, after US Federal Reserve governor Christopher Waller said the central bank’s board would “take our time” to cut interest rates.

At the closing bell, the benchmark S&P/ASX200 shed 0.3 per cent, or 21.7 points, to 7,393.1, while the broader All Ordinaries fell the same amount to 7.662.5.

The Australian dollar dropped against its US counterpart, falling 0.3 per cent to 65.66c, at the end of Wednesday’s session.

Speaking at an event hosted by Washington’s Brookings Institution overnight, Governor Waller said interest rate cuts needed to be done “methodically and carefully”, adding there was “no reason to move as quickly or cut as rapidly as in the past”.

US Federal Reserve Governor Christopher Waller spooked markets after cautioning against the rush to cut interest rates. Picture: NCA Newswire / Gaye Gerard

Perpetual head of investment strategy Matt Sherwood said despite efforts from Fed officials to dial back rate cut expectations, the market speculation of the timing and the size of rate cuts had gotten “way ahead of itself”.

“The labour market is still very, very robust. Job openings are abundant. And wages growth is over 4 per cent … It’s not really screaming of an economy which means lower interest rates,” Mr Sherwood said.

Despite market pricing, Mr Sherwood added there was no definitive proof the US central bank had “broken the back” of elevated core inflation.

“Inflation may actually bounce higher in the March quarter this year, and therefore, that would push back the timing of Fed rate cuts,” he said.

“That’s almost the complete opposite of what the market’s been thinking … [but] I think the message is slowly seeping through.”

Following the address, money markets pared back expectations of a March rate cut to 65 per cent, down from 80 per cent.

Returning from the Martin Luther King public holiday, Wall Street sank into the red. The S&P500 index was down 0.4 per cent, while the tech-heavy Nasdaq eased 0.2 per cent lower, while the Dow Jones shed 0.6 per cent.

Concerning the local outlook on monetary policy, National Australia Bank joined the remaining big four banks to forecast that the Reserve Bank would remain on hold at its first decision of 2024, scheduled for February 6.

Previously, NAB economists had been forecasting a rate hike to 4.6 per cent, followed by an extended pause through 2024, before the eventual easing of borrowing costs from November.

“Over recent months we believe the risks around the inflation profile have become more balanced with inflation data coming in slightly below the November … forecasts and growth remaining below trend,” the bank’s chief economist Alan Oster wrote in a note to clients.

On the benchmark, energy stocks were the worst performers, sliding 1.2 per cent as oil prices sank despite escalating tensions in the Red Sea.

The global oil benchmark, Brent crude sat below $US78 per barrel.

Energy stocks were the worst performers as global crude oil prices edged lower. Picture: NCA NewsWire / Sharon Smith

Sector heavyweights mirrored the fall in the crude oil price. Woodside sank 1.1 per cent to $30.78, Santos fell 0.9 per cent to $7.62, and Karoon Energy tumbled 2.7 per cent to $1.82.

Elsewhere in commodities, gold spot prices extended their losses to $US2023 an ounce after falling over 1 per cent overnight on the back of higher yields and a firmer US dollar.

Northern Star Resources fell 4.1 per cent to $12.34 while Regis Resources dropped 2.8 per cent to $2.07.

Meanwhile, Evolution Mining tumbled 17.3 per cent to $3.10 at the end of trading after it provided a trading update. The gold producer said it mined 161,073 ounces of gold between October and December at an all-in sustaining cost of $1618 an ounce, falling short of 191,000 ounces.

In other company news, shares in automotive parts company Bapcor sank 6.3 per cent to $5.25. In a statement, the company announced that its chief financial officer Stefan Camphausen had resigned to take on the same role at another ASX-listed firm.

Wealth manager Netwealth Group rose 2.4 per cent to $16.52 after analysts at UBS raised its price target for the fund to $18.40, up from $16.20, citing its “clean organic growth profile coupled with higher revenue margins and cash profitability”.

Originally published as Australian share market books four-day losing streak on US rates pushback