The Australian equity market extended its prolonged downturn into a ninth losing session in 10 trading days on Monday, driven by growing investor anxiety over an impending interest rate hike from the Reserve Bank of Australia (RBA) and a wave of downbeat corporate announcements. By the closing bell, the benchmark ASX 200 had slid 32.7 points, or 0.38%, to settle at 8697.1, while the wider All Ordinaries index dropped 30.9 points, or 0.35%, to end the session at 8923.8.
The nation’s big four banking giants recorded a mixed trading session, with results split by recent corporate earnings reports. National Australia Bank (NAB) led the declines among major lenders, dropping 1.58% or 62 cents to close at $39.20 after reporting a fall in half-year profits. Commonwealth Bank of Australia also closed in negative territory, edging 0.48% or 82 cents lower to $172.21. Gains were recorded by the remaining two major banks: ANZ rose 1.9% or 67 cents to finish at $36.29, while Westpac gained 0.13% to close five cents higher at $38.50.
Commodity markets also trended downward through the session. Spot gold prices fell 0.37% or 16.97 points to settle at US$4595.53 per ounce, while international benchmark Brent crude dropped 0.8% or 0.87 points to trade at US$107.30 per barrel. Against this backdrop, the Australian dollar hit a four-year high against the U.S. dollar, last trading at 72.02 US cents.
The majority of ASX sectors closed the day in negative territory. The Consumer Staples sector was the hardest hit, sliding 2.58% following a series of corporate updates. Alcohol and retail conglomerate Endeavour Group fell 3.8% or 12 cents to $3.29 after revealing plans to cut $100 million in operating costs by the 2027 financial year. Supermarket giant Coles Group dropped 3.93% or 90 cents to $22.02, while dairy processor Bega Cheese lost 3.58% or 20 cents to close at $5.38. The Utilities sector also posted notable losses, with AGL falling 3.1% or 30 cents to end at $9.39. The Information Technology sector was a rare bright spot, climbing 1.03% overall, led by a 6.15% jump for location technology firm Life360 (to $21.23, up $1.23) and a 2.92% rise for accounting software provider Xero (to $82.92, up $2.35).
All investor attention now turns to Tuesday’s RBA monetary policy announcement, where another interest rate increase is widely forecast. Market expectations for a hike have been amplified by global energy market volatility stemming from the ongoing conflict in the Middle East. BetaShares chief economist David Bassanese noted that while an increase would be disappointing for Australian mortgage holders, the broader sharemarket is unlikely to see extreme volatility in the days following the decision, as the move is already largely priced in. “Given it’s expected, the decision shouldn’t have a big effect on the market on Tuesday,” Bassanese explained. “The tone of the statement that accompanies the decision will be probably just as important as the decision itself. The market may be relieved if they raise rates but then signal that they’ll be pausing for some time.” He added that the RBA needs to cool domestic economic growth to prevent energy-driven inflation from becoming embedded in long-term wage and price setting. All eyes will be on RBA governor Michele Bullock as she delivers the central bank’s latest policy call and forward guidance.
A number of individual companies posted steep declines following negative corporate updates Monday. Footwear retailer Accent Group saw its share price plunge 12.9% or eight cents to 54 cents after the firm confirmed it is facing an investigation by the Australian Securities and Investments Commission (ASIC) into share market trading conducted by chief executive Daniel Agostinelli. The company also cut its full-year pre-tax earnings forecast to between $79.5 million and $84.5 million, well below consensus analyst expectations. Energy firm Viva Energy fell 3.2% or eight cents to $2.42 after announcing that repair works to its Geelong oil refinery, damaged in a major fire last month, would not be completed until the end of June, later than some market projections. Infant formula manufacturer A2 Milk recorded one of the steepest single-day drops, sliding 9.9% or 72 cents to $6.55 after issuing a recall of thousands of formula units shipped to the United States, triggered by the discovery of a toxin that can cause severe illness in young children.