Australian stocks extended losses amid fears of another rate hike

Australian stocks fell on Wednesday, led by commodities and banking stocks, as sentiment remained bleak after the country’s central bank signaled the need for more interest rate hikes.

The S&P/ASX 200 fell 0.8% to 7,175.9 at 0055 GMT. The benchmark index closed down 0.5% on Tuesday.

Minutes of the May policy meeting released by the Reserve Bank of Australia (RBA) showed that board members agreed that further interest rate hikes may still be needed, depending on developments in the economy and inflation in the country.

Markets priced an 85% chance of a rate break in June, while priced the risk of a rally in August or September higher. They also postponed the first rate cut to March next year.

Investors also reflected on the ongoing US debt ceiling negotiations, as US retail sales data for April indicated a slowdown in consumer spending.

Back in Sydney, heavy miners fell 1.5% on weaker iron prices. Major sector companies BHP Group and Rio Tinto each declined by 1.4%.

Gold stocks fell 2.1% on weaker bullion, with Newcrest Mining and Northern Star Resources falling 2% and 1.2%, respectively.

Financials fell by about 1%. The four so-called “Big Four” banks fell.

Energy stocks fell 0.4 percent as oil prices fell overnight. The sector’s big companies, Woodside Energy and Santos Ltd, lost 0.3% and 0.5%, respectively.

Healthcare stocks are trading in negative territory.

Technology stocks were the only gainers, with Xero Ltd jumping 1.4%.

Among individual stocks, Incitec Pivot fell 7.8% and was the main drag on the index, after the company’s semi-annual net profit from continuing operations fell 55.5%.

Shares of Solvar Ltd fell 4.9% after Australian regulator ASIC filed claims against its unit in the Australian Federal Court.

New Zealand’s benchmark S&P/NZX 50 fell 0.3% to 11,918.85. (Reporting by John Bigo in Bengaluru; Writing by Uttarish Venkateshwaran)