The S&P/ASX 200 index fell 0.67% to close at 7,420.4 points. The benchmark rose 0.36% on Monday.
Australia’s central bank does not expect price pressures to force interest rate hikes before 2024. However, it seems to be alerted to risks in its inflation forecasts as it acknowledges an upward shift in the distribution of possible outcomes.
“Inflation worries appear to be overpowering the Australian share market despite a dovish projection on the interest rate from the central bank,” said Kunal Sawhney, chief executive officer of Kalkine Group said.
“With Westpac raising its fixed mortgage rates for the third time in a month, the ultra-low interest rates seem to be nearing their end.”
Financials fell 0.38%, dragged by declines in the ‘big four’ banks in response to inflation worries, with the country’s largest lender Commonwealth Bank giving up as much as 0.9%.
Major miners fell 1.66%, as iron ore prices continued to soften, with global miners BHP Group down 2.6% and Rio Tinto down 2.2%.
Diversified miner Iluka Resources fell by 4.1%, while iron ore producer Mount Gibson Iron Ltd skidded 6.4%.
Technology was the only sector to resist, rising 0.18%, led by data centre operator NEXTDC Ltd, up 1.8%, followed by sector heavyweight Afterpay Ltd, gaining 1.7%.
New Zealand’s benchmark S&P/NZX 50 index fell 0.48% to finish the session at 12,902.7 points.
