Australian shares slump as US data sparks recession fears

Aug 5 - Australian shares slumped on Monday and were poised to extend losses for a second consecutive session, as weak U.S. jobs data fuelled fears of a recession, while investors maintained a cautious stance ahead of an interest rate decision this week.

The S&P/ASX 200 index was down 2.6% at 7,737.3 points, as of 0039 GMT, and on track for its worst intraday performance since September 2022, if losses hold. The benchmark ended 2.1% lower on Friday.

The Aussie dollar was trading 0.2% stronger against the greenback at A$0.65.

The weak U.S. payrolls data on Friday suggested that the economy was slowing more rapidly than anticipated.

Markets are now pricing in an over 70% chance of a 50-basis point cut at the U.S Federal Reserve's September meeting, compared with 22% last week, according to CME FedWatch.

The Reserve Bank of Australia is expected to keep interest rates unchanged when it meets on Tuesday, and wait until the first quarter of 2025 before cutting them, according to a Reuters poll.

Rate-sensitive financials dropped 3.2% and were on track to record their worst day since early May 2023, if current trend holds. Shares of the Big Four banks dropped between 2.8% and 3.8%.

The U.S. Dow Jones Industrial Average fell 610.71 points, or 1.51%, at 39,737.26 points on Friday. The S&P 500 lost 100.12 points, or 1.84%, while Nasdaq lost 417.98 points, or 2.43% in the previous session.

Australian miners fell 2.6% amid a broad-based sell-off, trading at their lowest levels since early November 2022. Shares of mining behemoths BHP and Rio Tinto slipped 2.1% and 1.8%, respectively.

Energy stocks tracked global oil prices lower after they dropped to an eight-month low as U.S. recession fears weighed. The Australian sub-index lost 3% to record its lowest levels since mid-July 2022, with sector heavyweights Woodside and Santos each down more than 2%.

Brent crude futures fell 0.2% to $76.66 a barrel while U.S. West Texas Intermediate crude lost 0.33% to $73.28 per barrel.

In New Zealand, the benchmark S&P/NZX 50 index dropped 1.6% to 12,252.63 points.

This article was generated from an automated news agency feed without modifications to text.