March 8 (Reuters) – Australian shares slipped 1% on Wednesday, weighed down by commodity stocks, after Federal Reserve Chair Jerome Powell said the US central bank is likely to increase interest rates more than previously forecast to tame sticky inflation.
The S&P/ASX 200 index snapped four sessions of gains and retreated 1% to 7,294.3 points, as of 0016 GMT. The benchmark closed 0.5% higher on Tuesday.
In his testimony, Powell confirmed that a recent spate of generally robust economic data, particularly in the labor market, along with stubbornly slow inflationary cool-down, increased the likelihood that the Fed will raise its policy rate more aggressively.
Investors are now assessing the possibility of a half-percentage-point hike in the Fed’s upcoming meeting after Powell’s comments.
In contrast, Reserve Bank of Australia (RBA) Governor Philip Lowethe central bank was closer to pausing its aggressive cycle of rate hikes as policy was now in restrictive territory and there were signs the economy was responding.
Lowe’s comments came a day after the RBAits cash rate by 25 basis points to the highest in more than a decade at 3.6%, a 10th straight hike since last May.
Energy stocks led losses on the benchmark with a 5% drop after oil fell by USD 3 a barrel overnight. The sub-index was set for its worst day in more than five months.
Sector major Woodside Energy slipped 7.6%.
Mining stocks slumped 1.3% with heavyweight miners BHP Group and Rio Tinto losing 0.2% and 0.5%, respectively.
Gold stocks dropped 3.6% after bullion prices fell more than 1%, while financial stocks retreated nearly 1%.
In other news, shares of Australia’s Carsales.com Ltd were on a trading halt after the company said it was seeking to raise AUD 500 million (USD 329.40 million) toan additional 40% stake in Brazil-based automotive digital marketplace Webmotors SA.
New Zealand’s benchmark S&P/NZX 50 index retreated 0.4% to 11,872.76 points.
(Reporting by John Biju in Bengaluru; Editing by Sherry Jacob-Phillips)
This article originally appeared on reuters.com