Australia's share market slipped on Tuesday as higher oil prices, a stronger US dollar and uncertainty surrounding global economic growth put pressure on investor sentiment. The decline followed gains in the previous session, with technology and mining stocks among the biggest contributors to the weaker performance.
By midday, the S&P/ASX 200 had fallen 41.7 points, or 0.47 per cent, to 8,741.7. The All Ordinaries Index also declined, dropping 46.7 points, or 0.53 per cent, to 8,890.3.
The movement reflected concerns in international markets about energy supplies, inflation and the outlook for technology companies. Westpac economist Neha Sharma said rising oil prices and uncertainty surrounding artificial intelligence investments had affected global risk sentiment.
Energy prices remained a major concern for investors as developments in the Middle East and uncertainty over a proposed Russia-Ukraine energy ceasefire raised questions about future supply.
Brent crude was trading at US$105.70 a barrel after climbing above US$107 overnight, reaching its highest level for October at that point.
The stronger US dollar and rising energy prices weighed on Australia's resources sector. The raw materials index dropped 1.7 per cent, with major mining companies BHP, Rio Tinto and Fortescue recording losses.
Gold producers also faced selling pressure as gold prices fell to approximately US$4,165 an ounce. The decline pushed the gold stocks sub-index down 1.7 per cent.
By contrast, energy companies performed more strongly. Santos, Woodside and Ampol each gained more than 1.4 per cent as investors assessed the potential benefits of elevated oil prices. Coal stocks delivered mixed results, while uranium shares declined.
Inflation remains an important consideration for Australia's economic outlook, particularly as fuel costs fluctuate and international tensions threaten supply chains.
Minutes from the Reserve Bank of Australia's September meeting indicated that further interest rate increases had not been ruled out if necessary to control inflation.
The central bank reiterated its focus on price stability and full employment, leaving the door open to additional monetary tightening should economic conditions require it.
Higher oil prices can increase transport and production expenses, potentially adding to inflationary pressure across the economy. Investors are therefore monitoring energy markets for signs of how they might influence future interest rate decisions.
Technology stocks were the weakest-performing sector on the Australian market by midday, falling 2.4 per cent. The decline followed a retreat in the Nasdaq overnight as investors reconsidered the outlook for technology businesses and artificial intelligence-related investments.
Financial stocks performed slightly better, with the major banks and leading insurers recording modest gains. Macquarie and several financial services companies moved lower.
Consumer-related shares also recovered from a weak start to the week. Consumer staples rose 0.8 per cent, while consumer discretionary stocks gained 0.4 per cent.
Telstra shares declined 0.7 per cent to $4.62 as the telecommunications company held its annual meeting. Chief executive Vicki Brady again apologised for the nationwide network outage in July.
The company's share price had fallen by almost 5 per cent over fewer than three trading sessions, reflecting recent pressure on its stock.
Meanwhile, the Australian dollar weakened to 69.53 US cents, down from 69.77 US cents at 5pm on Monday.
The Australian share market's performance highlights how international developments can influence local investments. Oil supply concerns, currency movements, inflation risks and uncertainty in the technology sector are all shaping trading conditions.
Investors will continue watching energy prices and central bank signals to assess the potential effects on company earnings and economic growth. Until there is greater clarity around these factors, movements across Australia's major share indices may remain sensitive to changes in global sentiment.
Source: Adrian Black – AAP