High interest rate sentiment weighs on Wall Street and Australian markets

The Australian share market has been impacted by the downturn of Wall Street due to increasing sentiment that interest rates will remain high for a longer period. The S&P/ASX 200 fell by 28.5 points, or 0.4%, to 7040.3 on Monday, despite most sectors maintaining their stability.

This comes after Wall Street ended a challenging week with further losses, reflecting the market's growing understanding that interest rates are unlikely to decrease significantly in the near future. The S&P 500 slipped 9.94 points, or 0.2%, after a late-day drop erased a modest gain it had held for most of the day, marking its worst week in six months.

The Dow Jones fell 0.3% and the Nasdaq composite dipped 0.1%. This downward trend was triggered by the bond market's yields climbing to their highest levels in more than a decade, following indications from the Federal Reserve that it's unlikely to cut its main interest rate as much as investors had hoped in 2024. The federal funds rate is at its highest level since 2001, an element that undermines investment prices as it battles high inflation.

On the Australian market, miners and banks were among the sectors contributing to its decline. Lithium miners Allkem (down 3.3%), Pilbara Minerals (down 3.9%) and IGO (down 1.9%) were among the largest large-cap decliners, while gold miners Evolution (down 2.1%) and Northern Star (down 1.7%) also contributed to the broader mining sector's loss of 1.2%.

Financial companies also saw a decline of 0.6% with all four big banks and Macquarie (down 1.2%) trading lower. Qantas shares also fell by 1.3% after the airline announced plans to spend an additional A$80 million on customer improvement initiatives and flagged a A$200 million hit from increasing fuel costs.

However, some sectors on the ASX were able to keep their heads above water. Energy companies, led by coal miners Whitehaven (up 2.7%), Yancoal (up 1.8%) and New Hope (OTC:NHPEF) (up 1.3%), were among the strongest performers on the index. Information technology firms and the consumer discretionary sector also saw gains, with Altium up 1.1% and JB Hi-Fi adding 1.5%.

In other news, property group GPT has appointed Russell Proutt as its new CEO, replacing outgoing CEO Bob Johnston. Proutt, who will assume his new role by March next year, was previously the chief financial officer at another property group, Charter Hall.

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