The Australian sharemarket declined on Monday, ending an eight-session rally, as investors locked in profits ahead of Tuesday’s interest rate decision by the Reserve Bank of Australia.
The S&P/ASX 200 dropped 55.2 points or 0.7% to 8,288.5, with losses across nine of the benchmark’s 11 sectors as materials and energy stocks led the downturn.
The market pullback comes amid expectations that the RBA will lower the cash rate for the second time this year, with markets expecting a 25 basis point cut to 3.85%.
Investor sentiment was further weighed by a downgrade of the U.S. sovereign credit rating by Moody’s, which cited growing fiscal deficits and higher debt servicing costs, while disappointing Chinese retail sales data added to the cautious tone.
Energy and mining companies bore the brunt of the selloff. BHP fell 2.4%, while Rio Tinto lost 1.3% and Fortescue Metals Group declined 4.9%.
Mineral Resources slumped 8.8% after naming a successor to outgoing chairman James McClements.
Lithium miner Liontown Resources tumbled 16.6% after the company said it had no explanation for the 52% surge in its share price since 8 May.
Coal miners retreated, with New Hope Corporation tumbling 7.1% after revising its production and sales guidance downward.
Domino’s Pizza Enterprises also dropped 2.6% following the announcement that its Australia and New Zealand chief, Kerri Hayman, will step down in August.
In contrast, investors rotated into defensive sectors. Gold miners found favour, supported by a rise in gold prices.
Evolution Mining gained 3.2%, and Northern Star rose 1.9%.
On the bond markets, the 10-year yield climbed 1.3% to 4.524%, while the 2-year rate eased 0.8% to 3.602%.
