Australian shares fall as miners slide, oil prices stoke inflation worries

On Tuesday, Australian shares fell as weak commodity prices impacted mining and gold stocks, and rising crude oil prices heightened inflation concerns, signaling a potential US Federal Reserve interest rate hike. The S&P/ASX 200 index declined by 0.5% to 8,709.6, as of 0005 GMT. The benchmark ended up 0.1% on Monday. The Middle East conflict-related surge in oil prices reignited inflation worries, with investors increasing their bets on a Fed rate hike at their next meeting on Wednesday.

Traders now believe there is a 90% chance of a 25 basis point rate increase at the upcoming policy meeting to combat inflation caused by high oil prices, according to CME’s FedWatch. Australia's next rate decision meeting is scheduled for the end of the month, where some economists anticipate a 25 basis point hike to 4.60%. On the stock exchange, the mining sub-index dropped 2.2% to its lowest level since early August, marking a fourth consecutive decline as iron ore and copper prices hit a three-week low.

Major players such as BHP, Rio Tinto, and Fortescue fell between 1% and 2.5%. Gold miners reached a near four-week low, slipping 2.7% after precious metal prices fell to a more than one-month low in the previous session. Heavyweights on the sub-index, Northern Star and Evolution Mining, dropped 3.5% and 3.9%, respectively. Healthcare stocks and consumer staples continued their gains from the previous session, increasing by 0.8% and 0.5%, respectively.

Financials slipped by 0.1%, with all the 'Big Four' banks losing between 0.2% and 0.5%. Local technology stocks rose 1.6% after six consecutive losing sessions. Concerns over AI safety were raised by US executives from artificial intelligence companies, leading to market turmoil. Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index lost 0.1% to 13,550.73.