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Australian shares ended slightly lower, led by financial and real estate stocks affected by rate hike concerns, while rare-earth miners faced pressure from potential U.S. policy changes. The S&P/ASX 200 dipped marginally, with banks like Commonwealth Bank and Westpac declining over 1%. Rare-earth producers, including Lynas Rare Earth and Iluka Resources, dropped significantly amid reports that U.S. plans to guarantee minimum prices for critical minerals could be scaled back. Mining and energy sectors provided limited support, with BHP, Rio Tinto, and oil-related stocks seeing modest gains.
Australian equities closed modestly lower as concerns over interest rate hikes weighed on financial stocks, and rare-earth miners were hit by potential U.S. policy changes. The S&P/ASX 200 eased slightly to 8,927.50 points, marking a minor decline following a previous small fall. Advertisement
Market sentiment has been influenced by recent inflation data showing core inflation above expectations last quarter. This has increased the likelihood of a rate hike when the Reserve Bank of Australia meets next month, prompting traders to factor in nearly a 70% chance of an increase. Analysts noted that expectations of tighter monetary conditions were a key factor weighing on the market.
The financial sector experienced a downturn, with the S&P/ASX financial index sliding 0.3%. Commonwealth Bank and Westpac were among the notable decliners, dropping 1.1% and 1%, respectively. Analysts indicated that higher interest rates could eventually benefit banks through increased net interest margins, potentially supporting sector performance over time.
Real estate stocks also mirrored the trend, falling 0.2% amid concerns that higher borrowing costs could reduce property demand. Charter Hall Group and Harvey Norman saw declines of 2% and 0.9%, reflecting investor caution in the property sector.
Rare-earth miners came under pressure following reports that the U.S. administration might scale back plans to guarantee minimum prices for critical minerals projects. This weighed heavily on companies such as Lynas Rare Earth and Iluka Resources, which fell 3.7% and 14.1%, respectively. Iluka also announced a non-cash impairment charge of around A$350 million (USD 248.08 million) before tax for its mineral sands business, to be reflected in its final 2025 results.
Despite these pressures, the broader mining sub-index rose 1%, driven by gains in major producers like BHP and Rio Tinto. Energy stocks also recorded modest gains of 0.9%, benefiting from a rise in oil prices, helping offset some losses across other segments of the market.
Meanwhile, New Zealand's S&P/NZX 50 index declined 0.5% to 13,348.61 points, reflecting regional market caution amid global inflation and policy concerns.
Source Reuters
5th Jun, 2025
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