Australian shares fell to a fresh three-month low on Monday as weakness in mining stocks weighed on the market, while investors positioned ahead of an expected interest rate increase by the Reserve Bank of Australia, as the conflict in the Middle East keeps oil prices elevated.
The S&P/ASX 200 Index dropped 33.7 points, or 0.4%, to close at 8,583.4, its lowest closing level since 10 December, despite six of the benchmark’s 11 sectors finishing higher during the session.
The materials sector led the decline as iron ore prices retreated and gold weakened. BHP fell 1.2%, while Rio Tinto and Fortescue Metals dropped 2% and 3.9%, respectively.
The decline followed reports that China’s state-backed iron ore trader would temporarily ease restrictions on one of BHP’s iron ore grades.
Gold miners were also heavily sold as the precious metal slipped toward the US$5,000 per ounce level after falling for two consecutive weeks amid strength in the U.S. dollar, which has been supported by the ongoing conflict involving Iran.
Shares in Northern Star Resources lost 5.4%, Evolution Mining dipped 3%, and Newmont retreated 4.2%.
Energy stocks provided some support to the broader market as oil prices remained elevated. Woodside Energy rose 1.9%, Santos gained 2.1%, and Beach Energy added 1.3%.
As the Middle East conflict enters its third week, the International Energy Agency said strategic oil supplies from Asia would begin flowing into markets immediately, while additional barrels destined for Europe and the Americas are expected to become available from the end of March.
The major banks traded mixed ahead of the Reserve Bank of Australia’s policy decision on Tuesday, where markets widely expect the central bank to raise interest rates again.
In company news, Perpetual climbed 2.8% after agreeing to sell its wealth management division to Bain Capital for an upfront cash payment of A$500 million, with potential additional earn-out payments of up to $50 million.
Reliance Worldwide surged 6.2% after announcing a further A$120 million on-market share buyback aimed at returning excess capital to shareholders.
Lynas Rare Earths gained 1.3% after signing a binding letter of intent with the U.S. Department of War to supply light and heavy rare earth oxides, with US$96 million allocated over a four-year period.
On the bond markets, Australian government yields were mixed. The 10-year bond yield rose 0.2% to 5.005%, while the two-year yield fell 0.2% to 4.566%.
