‘Nail in the coffin’: Australian sharemarket falls as fears of rate hike look, mining giants and big four banks slide

The final “nail in the coffin” for an interest rate hike next week and oil prices back above $US100 a barrel combined to smash the ASX 200 during Thursday’s trading.

The benchmark ASX 200 slumped 63.30 points, or 0.72 per cent, to 8702.00, while the broader All Ordinaries gave up 59.20 points or 0.66 per cent to 8897.00.

Australia’s dollar eked out a small gain against the greenback to buy 70.34 US cents.

Despite the market dropping on Thursday, six of the 11 sectors finished higher, led by gains in energy shares due to higher oil prices.

Woodside shares jumped 1.54 per cent to $31.61, Santos rallied 1.79 per cent to $8.55 and Ampol climbed 1.66 per cent to $44.80, on a strong day of trading for the oil producers and retailers.

But falls in the index heavy materials and financials sector hurt the ASX.

Mining giant BHP slumped 1.69 per cent to $61.02, Rio Tinto dragged 0.69 per cent to $166.46 and Fortescue slipped 0.59 per cent to $16.75.

With a near-90 per cent of a rate hike next week, all four major banks sold off.

Shares in Commonwealth Bank temporarily touched a February low at $147.41, before recovering marginally in the afternoon session to be down 0.71 per cent for the day to $149.98.

National Australia Bank fell 1.32 per cent to $38.15, Westpac dropped 1.81 per cent to $34.13 and ANZ dragged 1.06 per cent to $37.43.

On Thursday, markets received the final piece of the economic puzzle ahead of the Reserve Bank’s next meeting, with the unemployment rate coming in at its highest level since 2021.

Betashares chief economist David Bassanese said Thursday’s slight uptick in unemployment to 4.6 per cent was the final nail in the coffin for a rate hike on September 28-29.

“For the RBA, the lift in unemployment will likely be regarded as unfortunate, but the price that needs to be paid to create more slack in the economy and lower domestic-demand-driven inflation pressure,” he said.

“My base case remains that the RBA will raise interest rates 0.25 per cent next week to 4.6 per cent, with an even-odds chance of a follow-up hike on Melbourne Cup Day in early November.”