Australia’s financial markets experienced a significant downturn on Monday, with the benchmark ASX 200 index closing at its lowest level in three months. The sell-off was driven by mounting concerns over escalating global oil prices and anticipations of consecutive interest rate increases by the Reserve Bank of Australia.
The ASX 200 declined by 33.70 points (0.39%) to settle at 8583.40, while the broader All Ordinaries index dropped 45.70 points (0.52%) to 8793.40. Market sentiment remained cautious as the Australian dollar traded at 70.07 US cents, with five out of eleven sectors finishing in negative territory and 116 ASX-listed companies closing lower.
The energy sector emerged as the sole outperformer, benefiting from the ongoing surge in crude oil prices. Brent Crude exceeded $106 per barrel over the weekend before moderating to $104.63 during afternoon trading—representing a staggering 40% increase since the onset of recent geopolitical tensions. This rally propelled energy giants Woodside Petroleum (+1.90% to $31.63) and Santos (+2.12% to $7.69) higher.
Conversely, major mining corporations faced substantial selling pressure, with BHP declining 1.22% to $49.19, Rio Tinto dropping 2.02% to $154.70, and Fortescue Metals slumping 3.86% to $19.69. Technology stocks similarly struggled, as WiseTech Global (-1.98%), Xero (-1.92%), and Technology One (-2.61%) all recorded losses.
Market participants are increasingly pricing in a 70% probability of interest rate hikes following the RBA’s March meeting. According to BetaShares chief economist David Bassanese, monetary markets are preparing for back-to-back increases in March and May, potentially elevating the cash rate from 3.60% to 4.25%—effectively reversing the anticipated 2025 rate cuts.
Individual stock movements showed notable divergence. Macquarie Group shares fell 0.69% following regulatory penalties, while Lynas Rare Earths gained 1.40% after securing a letter of interest from the US Department of Defense. Reliance Worldwide Corporation surged 6.85% on news of a $120 million share buyback, whereas IperionX collapsed 22.24% after releasing half-year results.