Australia shares edge higher as banks gain, oil prices extend losses

Australia's stock market saw a slight gain on Thursday as banks led the broad-based gains, while oil prices continued their downward trend due to eased concerns over Middle East supply disruptions. The S&P/ASX 200 index gained 0.4% to 8,726.7, edging higher from a 0.3% increase on Wednesday. Oil prices dropped over $1 but stayed above $100 a barrel as reports emerged of Saudi Arabia supplying more crude oil through Oman.

The rising oil prices had triggered inflation worries, potentially justifying central banks' move to raise interest rates to curb price pressures. Earlier, the US Federal Reserve unanimously increased its benchmark interest rate by 25 basis points, with Federal Reserve chief Kevin Warsh emphasizing the need for additional policy tightening.

The Reserve Bank of Australia is expected to discuss a potential rate hike at its upcoming meeting on September 28-29, with markets forecasting a near 90% chance of a hike to 4.60%. Financial stocks surged as much as 1.7% to a one-week high, with the 'Big Four' banks increasing by 0.5% to 1.5%. Consumer discretionary stocks climbed 0.8%, while real estate stocks bounced back from an eight-day losing streak, rising 0.7%.

Energy stocks, however, fell 1.2% following the oil price decline, with Santos and Woodside each down 1.6% and 1%, respectively. Gold stocks suffered a 2.8% drop as bullion prices hit a six-week low before recovering slightly in early Asia trade. Evolution Mining dropped 1.7%, while Northern Star Resources declined 1.5%. The broader mining sector fell 0.3%, reversing the previous day's 1.4% gain.

In New Zealand, the S&P/NZX 50 index edged up 0.1% to 13,640.13. Official data revealed that New Zealand's economy grew more slowly in the second quarter compared to the previous quarter due to the Middle East crisis dampening confidence, but the figure was slightly better than anticipated.