Australian share market down as US Federal Reserve spooks investors

A grim warning by US Federal Reserve chair Jerome Powell saw the Australian share market finishing lower on Friday, erasing the week’s gains.

The Australian share market finished lower on Friday after head of the US Federal Reserve Jerome Powell suggested the central bank could well hike rates again this cycle.

The S & P/ASX200 fell 0.6 per cent, or 38.4 points, to close at 6,976.5 points at the close of trading. The All Ordinaries fares slightly better, falling 0.5 per cent to 7.176.6.

The Australian dollar is buying US63.62c, down 0.1 per cent.

All 11 industry sectors finished in the red, with utility and energy stocks the worst performers, down 1.7 per cent and 1.5 per cent, respectively.

The benchmark index has erased all its gains for the week and has returned to levels recorded last Friday.

Energy stocks continued to retreat as global oil prices continued to lose ground. Picture: AFP / Frederic J. Brown.

Energy stocks were the worst performers across trading this week, losing 4 per cent, as global oil prices continue to retreat after they jumped following fears of a broadening of conflict in the Middle East.

Brent crude is trading near $US80.50 a barrel, while West Texas Intermediate is nearing $US76 a barrel.

The big four banks also fell. Commonwealth Bank sank 0.9 per cent to $101.32, ANZ fell 1.3 per cent to $25.47, Westpac lost 1.3 per cent to $20.86 and NAB was down 1.7 per cent to $28.46.

Investors were also spooked by the release of RBA’s latest statement on monetary policy which showed inflation is expected to still be running at 3.5 per cent by the end of 2024, up from the central bank’s previous estimates of 3.25 per cent.

The RBA’s latest statement on monetary policy forecast inflation would remain higher for longer. Picture: NCA NewsWire / Christian Gilles

“The board would prefer not to raise rates again in this cycle. But they are very much data dependent,” Commonwealth Bank chief economist Gareth Aird said.

“This means the board is willing to raise the cash rate again if the economic data, particularly around inflation, comes in stronger than their updated forecast.”

In company news, mixed miner Mineral Resources experienced a 2.6 per cent decline to $58.35. The drop followed the company's payment of up to $60 million plus royalties to secure lithium, nickel, copper, and cobalt rights for Pantoro Limited’s Norseman gold project in Western Australia.

REA Group, owned by News Corp (the owner of this masthead), sank 2.1 per cent to $156.22. The property listing website posted a $341m in revenue for the September quarter, with adjusted earnings totalling $198m, marking a 13 per cent increase.

Originally published as Australian share market down as US Federal Reserve spooks investors