Overall Market Performance

The Australian stock market saw a sharp decline in recent trading, nearly wiping out the previous day’s gains. Weakness in the financial, mining, and real estate sectors drove the S&P/ASX200 index lower.

Investor Sentiment Ahead of the Federal Reserve Meeting

Investors are closely watching the upcoming Federal Open Market Committee (FOMC) meeting, with widespread expectations that the Federal Reserve will announce a 25 basis point rate cut. Chris Weston, Head of Research at Pepperstone, noted that selling pressure was heaviest from the market open through midday before momentum subsided.

Mixed Sector Performance

Among the 11 major sectors, only three finished higher, while the rest struggled:

• Financials dropped 0.7%. Of the four major banks, only ANZ edged up 0.3%. CBA slipped 0.1%, NAB fell 1.5%, and Westpac declined 1%.
• Mining stocks were generally weak, with BHP, Fortescue, and Rio Tinto all down more than 1%. BHP also announced it will cut 750 coal-related jobs in Queensland due to weak coal prices and unsustainable tax policies.
• Gold stocks slid as investors took profits after gold reached a new all-time high, prompting a broad retreat in prices.
• Real estate was the worst-performing sector, dropping 1.6%. Both GPT Group and Stockland tumbled over 2.2%.

In contrast, energy (+0.5%) and utilities (+0.8%) posted strong gains, fueled by concerns over potential disruptions in Russian crude supply driving oil prices higher. Technology rose slightly by 0.1%, lifted by REA Group, WiseTech, and Xero.

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Summary

The Australian market sell-off was primarily caused by sector rotation and investor caution ahead of the U.S. rate decision. Energy and utilities held up well thanks to support from commodity prices, while financials, mining, and real estate led the declines. As the FOMC decision nears, the market may see new trends in the following sessions.