Australian financial markets witnessed a significant downturn on Friday as shares plunged to their lowest level in five months amid a widespread sell-off that particularly hammered mining and banking sectors.
Market Performance Hits June Lows
The S&P/ASX 200 index dropped 1.6% to 8,419.50 by 2335 GMT, marking its weakest position since June 3 this year. This substantial decline came despite the benchmark index having registered a 1.2% gain just the previous day on Thursday.
The Australian share market is now heading toward a 2.2% weekly decline, representing its poorest weekly performance since March 31. Market analysts attribute this downward trend to growing concerns about overvaluation in certain market segments and diminishing expectations for additional monetary policy support.
Sector-Wide Carnage Hits Key Industries
Financial stocks experienced a sharp 1.3% fall, with Australia's 'big four' banks declining between 1.2% and 2.2%. The banking sub-index appears set to record its second consecutive week of losses as investors exit what they perceive as an overpriced sector, citing premium valuations and potential margin pressures that could impact future earnings.
The resources sector faced even steeper declines, with the sub-index tumbling 3.1% as iron ore and copper prices weakened amid concerns about softening demand in China, the world's largest metals consumer. Mining giants BHP, Rio Tinto, and Fortescue dropped 3.1%, 2.6%, and 3.3% respectively.
Gold miners also suffered substantial losses, with Northern Star Resources and Evolution Mining falling 3.8% and 4% respectively, tracking the decline in bullion prices.
Technology and Energy Stocks Join the Downturn
Technology stocks mirrored global trends, declining 1.8% as the tech-heavy Nasdaq Composite reversed gains to close lower overnight. Notably, even Nvidia's optimistic quarterly forecast failed to convince investors about the sustainability of the artificial intelligence boom, causing the AI darling to lose its market appeal.
Sector leaders WiseTech Global and Xero declined 2.6% and 2.2% respectively, reflecting the broader tech sector weakness.
Energy stocks followed the downward trajectory, falling 1.4% as oil prices retreated. Major players Woodside Energy and Santos dropped 1.5% and 1.9% respectively, adding to the market's woes.
New Zealand Markets Follow Regional Trend
The negative sentiment spread across the Tasman Sea, with New Zealand's benchmark S&P/NZX 50 index slipping 1.3% to 13,261.59. The index is poised for its most significant weekly decline since mid-October. Market attention now turns to the country's central bank, which according to a Reuters poll, is expected to cut its key rate to 2.25% on Wednesday.
The comprehensive market sell-off highlights growing investor anxiety about global economic conditions and sector-specific challenges, particularly in resources and technology where valuation concerns have become increasingly prominent.
