Australian share market tumbles to four-week low amid European rate cut jitters

With all sectors posting declines, the local benchmark slumped to its lowest level in four weeks on Tuesday.

The Australian share market tumbled on Tuesday to hit a four-week low as central bankers in Europe foreshadowed a delay in rate cuts.

At the closing bell, the benchmark S&P/ASX200 dropped 1.1 per cent, or 81.5 points, to 7,414.8, while the broader All Ordinaries shed the same amount to 7,647.1.

Against the greenback, the Australian dollar was 0.7 per cent lower to 60.61c at the end of trading.

The fall followed comments from Robert Holzmann, who sits on the European Central Bank’s governing council, at the Davos Economic Forum overnight.

He said it was too early to talk about easing monetary policy and there was “no guarantee of rate reductions” in 2024.

“The likely cause of today’s sell-off is a reaction to ECB officials pushing back against the pricing of early ECB rate cuts,” IG Australia market analyst Tony Sycamore said.

ECB official Robert Holzmann warned it was too early to talk about lowering borrowing costs in 2024. Picture: AFP / Daniel Roland.

“There is a concern that Fed Governor (Christopher J) Waller may echo similar hawkish thoughts when he speaks [on Wednesday] morning to bring some sense of reality to rates markets that has gotten ahead of itself.”

Wall Street was closed on Monday for the Martin Luther King Day holiday.

Locally, all 11 industry sectors finished in the red. Utilities stocks were the worst performer, falling 1.8 per cent.

Energy and materials also finished sharply lower, both shedding 1.5 per cent.

Despite an escalation of tensions in the Middle East, crude oil prices steadied. Brent Crude, the global benchmark, edged slightly higher to $US78.23 per barrel, while European gas futures slipped to five months lows.

Energy sector heavyweights Woodside shed 1.6 per cent to $31.13, Santos slipped 1.8 per cent to $7.69 and Karoon Energy tumbled 2.1 per cent.

On the Singapore exchange, iron ore futures for the February contract extended their losses, falling 1 per cent to $US126.25 a tonne.

ASX heavyweight BHP eased 1.4 per cent to $46.50, while Fortescue dipped 2.2 per cent to $26.65.

Rio Tinto’s chief executive Jakob Stausholm revealed a fresh tax claim against the iron ore giant. Picture: NCA NewsWire / Sharon Smith

Despite delivering the best export volume for its iron ore division in five years, Rio Tinto shares slipped 1.3 per cent to $126.66. The mining giant revealed it has received a tax claim worth $US80m ($AU121m) from the Mongolian Tax Authority.

In other company news, jewellery retailer Lovisa was the worst performer on the benchmark, dipping 5.2 per cent to $22.72, after UBS analysts revised the stock to a neutral rating.

Charter Hall added 2.2 per cent to $11.85 after brokers at Morgan Stanley upgraded the property firm’s shares to an overweight rating, and upped its price target to $13.25.

Supercheap Auto, Macpac and Rebel, parent Super Retail Group, slumped 2.6 per cent to $16.27 after the stock was downgraded by Jarden analysts to an underweight rating.

On Monday, the shares vaulted 5.6 per cent, after the firm posted a robust increase in sales over the six months to December 2023.

Originally published as Australian share market tumbles to four-week low amid European rate cut jitters