Australian shares head for fourth weekly loss on oil-driven inflation fears

Australian shares experienced their second consecutive session of decline on Friday, edging closer to their fourth weekly loss, as surging oil prices reignited concerns about inflation and increased doubts about the trajectory of interest rates. The S&P/ASX 200 index fell by 0.5% to 8,661.20 by 0010 GMT, with the potential to decline by a further 0.8% this week.

This downturn was attributed to heightened tensions in the Middle East and the lack of progress in US-Iran peace talks, both of which had driven oil prices above $100 a barrel, dampening confidence in the market. In Australia, persistent inflation pressures, exacerbated by escalating energy costs and substantial investments in data centers, had led markets to anticipate another rate hike, which would push the cash rate to a near 15-year high of 4.60%.

Concurrently, data released on Thursday revealed that Australia's unemployment rate unexpectedly rose to a five-year high last month, despite a robust employment rebound, leaving markets divided on whether another rate hike was imminent to combat inflation. Among the stocks, miners saw their shares drop by 1%, pressured by the decline in copper prices.

BHP and Rio Tinto both reached their lowest levels in about a week. The sub-index was poised for its fourth consecutive weekly decline. Among gold miners, Northern Star Resources and Evolution Mining experienced a decline of 0.7% and 0.5%, respectively. Technology stocks followed overnight losses on Wall Street and were last down by 1.5%.

Logistics software company WiseTech Global slipped nearly 2%, while accounting software firm Xero shed 2.9%. Consumer discretionary stocks declined by 0.7%, while industrials fell by 0.5%. Insurance Australia Group, on the other hand, saw a notable rise of nearly 2%, marking its largest intraday gain in two weeks, following an agreement to settle a A$2.8 billion lawsuit from Credit Suisse over losses tied to the collapse of finance firm Greensill Capital.

New Zealand's S&P/NZX 50 index also experienced a slight decline of 0.3% to 13,788, but had still gained 0.5% for the week.