Australian shares log worst day in 4 months on rout in banks, miners

March 10 (Reuters) – Australian shares posted their sharpest daily loss in over four months on Friday, weighed down by financials and miners in a sell-off over prospects of further interest rate hikes.

The S&P/ASX 200 index fell 2.3% to 7,144.7 points. The benchmark lost about 2% over the week.

Investor sentiment remained subdued during the week after US Federal Reserve Chair Jerome Powell’s hawkish remarks, highlighting the need of a high interest rate environment to tame inflation.

Investors now await US non-farm payrolls data for February, due later in the day, which is expected to fuel inflationary woes.

Back in Sydney, banks led the losses with the sub-index closing 2.8% lower.

The Australian Securities and Investments Commission (ASIC) said that country’s six largest banking service providers have paid or offered AUD 4.7 billion (USD 3.09 billion) in compensation to customers charged with higher fees.

All of the “Big Four” lenders fell, with ANZ Group Holdings Ltd down 2.8%. Financial conglomerate Macquarie Group Ltd and asset manager AMP Ltd also fell.

“The bank sell-off is clearly driving the rest of the market lower as lenders face their own set of challenges, which include a slowing property market and greater competition for few loans as the economy slows,” said Carl Capolingua, Market Analyst at ThinkMarkets Australia.

Local lithium miners emerged as one of the top laggards on the benchmark, with seven of top ten losers on ASX-200 being lithium producers.

Shares tanked as spodumene prices hit one-year low. Heavyweights Mineral Resources Ltd and Pilbara Minerals Ltd lost 6.6% and 7.1% respectively.

Energy shares and miners tracked the broader market despite higher or unchanged underlying commodity prices. The sub-indexes closed down around 3.3% each.

Mining stocks BHP Group Ltd, Rio Tinto Ltd, Fortescue Metals Group Ltd, and oil and energy majors Woodside Energy Group Ltd and Santos Ltd all traded in the red.

New Zealand’s benchmark S&P/NZX 50 index fell 0.8% to end the day at 11,727 points.

(Reporting by Rishav Chatterjee in Bengaluru; Editing by Varun H K)