The Australian sharemarket is poised for its largest decline this year, with mining stocks leading the downturn. The S&P/ASX 200 index fell by 1.2 per cent, or 103.40 points, to 8765.70 by 2.03pm AEDT, with nine out of eleven sectors experiencing losses. This decline mirrors a global equity sell-off and precedes the Reserve Bank of Australia’s anticipated interest rate hike on Tuesday. This hike would represent the first tightening move by a major central bank in the current economic cycle.
The sell-off was sparked by market reactions to Donald Trump’s rumored appointment of Kevin Warsh as Federal Reserve chair. Gold prices extended losses, dropping to a low of $US4584 before settling at $US4747 an ounce, a 2.8 per cent decrease. Silver also experienced a significant drop, falling 2.3 per cent to $US83.27. Commonwealth Bank commodity strategist Vivek Dhar suggested that the precious metals sell-off has prompted market speculation about whether this represents a buying opportunity or the start of a price correction.
The mining sector bore the brunt of the market’s anxieties, with Newmont falling 8.9 per cent, Northern Star dropping 7.4 per cent, and Emerald Resources declining 9.8 per cent. Among silver miners, South32 decreased by 4.4 per cent and Sun Silver by 8.4 per cent. Major banks showed mixed performance as the Australian dollar weakened to around US69.48¢. Commonwealth Bank saw a rise of 0.8 per cent and ANZ was up 0.1 per cent, while Westpac fell 0.2 per cent, and National Australia Bank declined 1.1 per cent.
In other company news, GrainCorp, which is an Australian agribusiness and food processing company, experienced a 14.2 per cent dive after lowering its EBITDA guidance to $200 million to $240 million. KMD Brands, a global outdoor, sports, and lifestyle company consisting of Kathmandu, Rip Curl, and Oboz, fell 4.2 per cent amid analyst warnings about earnings risks. Recce Pharmaceuticals gained 4.5 per cent following a research agreement with the United States Army, while Catalyst Metals dropped 8.6 per cent amid the gold sell-off and the appointment of Mark Connelly as its new chairman.
