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Australian shares experienced a significant decline on Wednesday, driven by global market sentiment and domestic economic concerns. The S&P/ASX 200 index fell 1.4% to 7,989, marking its worst day since 5 August 2024.
Global Market Impact
The drop in Australian shares was influenced by lackluster data from the U.S., which dampened global market sentiment. Data from the Institute for Supply Management showed that U.S. manufacturing, while slightly improved in August from an eight-month low in July, remained subdued. This persistent weakness in manufacturing raised concerns about the broader U.S. economy, contributing to a negative global market outlook.
Domestic Economic Concerns
In Australia, investors are awaiting the release of the country’s second-quarter GDP report. This report is expected to reveal an annual growth rate of 1%, according to LSEG data. A disappointing GDP figure could further impact market sentiment and prompt concerns about the Reserve Bank of Australia’s monetary policy stance, as noted by Michael McCarthy, chief commercial officer at Moomoo.
Sector-Specific Declines
- Mining Sector: Heavyweight miners led the losses, with the mining sub-index falling 2.5% to its lowest level since October 31, 2022. This decline followed weaker iron ore prices. Major players such as BHP Group (ASX:BHP) and Rio Tinto (ASX:RIO) were down 1.7% and 2%, respectively.
- Energy Sector: Energy stocks also saw a notable drop, with the energy sub-index falling 2.4% to its lowest level since March 2022. This was driven by a decline in oil prices, with Brent crude futures falling 0.2% to $73.60 per barrel and U.S. West Texas Intermediate (WTI) crude losing 0.28% to $70.14 per barrel. Woodside Energy (ASX:WDS) fell 2.1%, while Santos (ASX:STO) was down 2.9%.
- Technology Sector: Technology stocks tracked overnight losses in U.S. markets, with the technology sub-index falling 1.8%. Shares of Xero (ASX:XRO) declined by 1.6%.
U.S. Market Performance
The U.S. markets experienced significant losses, with the Dow Jones Industrial Average falling 626.15 points (1.51%) to 40,936.93 points, the S&P 500 dropping 119.47 points (2.12%), and the Nasdaq losing 577.33 points (3.26%).
New Zealand Market
In New Zealand, the benchmark S&P/NZX 50 index fell 0.6% to 12,451.27, reflecting similar market trends in the region.
Overall, the combination of global economic uncertainties and domestic data expectations contributed to the broad-based sell-off in Australian shares, with various sectors experiencing notable declines.
