The Australian stock market extended its losing streak on Thursday, with the S&P/ASX 200 index closing at its lowest level in two weeks. The benchmark shed 0.6% to finish at 8,793.40, pressured by a broad decline in financial and mining stocks, even as energy shares posted strong gains. The index has now fallen for nine consecutive sessions, reflecting growing unease over inflation and monetary policy.
Rate Hike Expectations Intensify
Market pricing now indicates a nearly 75% probability that the Reserve Bank of Australia will implement a 25-basis-point rate hike at its early May meeting. This shift follows a fresh surge in oil prices, with Brent crude climbing above $103 per barrel, reigniting inflation concerns just as investors were hoping for relief. The upcoming March CPI release, due next week, will be the first inflation print to fully incorporate the recent energy price spike, adding to the uncertainty.
Financials Extend Slide
The financials sub-index dropped 0.7%, marking its ninth consecutive decline. Shares of the big four banks fell between 0.2% and 1%. National Australia Bank warned earlier this week that its first-half credit impairment charges are expected to double, while Westpac flagged additional provisioning costs related to Middle East turbulence. The sector remains under pressure amid concerns over rising loan defaults and a slowing economy.
Miners Weaken
The mining sector fell 1%, its steepest drop since April 2. Rio Tinto declined 0.6%, and Fortescue gave up 1.1%. Despite reporting a 2.4% increase in first-quarter iron ore sales, Rio Tinto cautioned that supply chain disruptions from the Middle East conflict could impact operations later this year. The broader materials sector continues to face headwinds from weaker commodity demand and geopolitical risks.
Energy Stocks Surge
Energy names were the standout performers, with the energy sub-index jumping 3.1%. Santos rallied 3.6%, its strongest single-day gain since March 2, after reaffirming its 2026 production and sales targets despite the Barossa project shutdown and cyclone-related port closures. Woodside gained 3.2%. Santos CEO Kevin Gallagher noted the company has partnered with Viva Energy and Ampol to support domestic refining capacity.
Healthcare Hits Eight-Year Low
The healthcare sector slipped 0.4% to touch its lowest level in eight years. CSL hovered near prices not seen since 2017, following the Pentagon's decision to drop the U.S. military flu-vaccine requirement. Cochlear continued to face heavy selling after its steep downgrade and a 40.7% plunge the previous day. Marc Jocum, senior product and investment strategist at GlobalXETFs, described the Pentagon news as 'the straw that finally breaks the camel's back' for CSL.
Broader Market Sentiment
Asia-Pacific markets also declined, with Japan's Nikkei falling 0.9% and Hong Kong's Hang Seng dropping 1.1%, even as U.S. benchmarks hit fresh records overnight. 'Markets were very on edge,' said Charu Chanana, chief investment strategist at Saxo, describing the mood as a 'no-war, no-peace zone.' The risk remains that any further escalation in the Middle East or a collapse in ceasefire talks could keep oil prices elevated and pressure earnings projections.
