Australian shares drop 2% as Fed signals fewer rate cuts in 2025
Dec 19 (Reuters) -Australian shares plunged more than 2% on Thursday, led by commodity stocks and banks, as global investors reacted to the prospect of fewer rate cuts from the U.S. Federal Reserve next year following its recent quarter-point rate reduction.
The S&P/ASX 200 index .AXJO was down as much as 2.1% at 8136.6, as of 2357 GMT, its lowest level since Nov. 6. The benchmark ended almost flat on Wednesday.
The Federal Open Market Committee (FOMC) reduced the Fed funds target rate by 25 basis points at its final meeting of 2024. However, it lowered its projected rate cuts for 2025 from four to two, signalling a likely pause in January.
In Sydney, miners .AXMM led losses in the benchmark index, dropping 2.3%as supply concerns eased and demand slightly slowed due to steelmakers in top consumer China conducting maintenance on more furnaces. IRONORE/
Mining behemoths BHP Group BHP.AX, Rio Tinto RIO.AX and Fortescue FMG.AX added between 1.6% and 3%.
Gold miners .AXGD followed suit, dropping as much 5% to their lowest levels since Nov. 18, as underlying bullion prices took a beating after the U.S. Fed's rate announcement. GOL/
Sub-index leaders Northern Star Resources NST.AX and Evolution Mining slipped as much as 5.4% and 6.1%, respectively.
The financials .AXFJ dropped 2.2%, with the "Big Four" lenders down between 2.2% and 2.6%.
Technology stocks .AXIJ fell as much as 3.6%, mirroring the drop in U.S. Nasdaq .IXIC.
In company news, Woodside Energy WDS.AX said it entered into a deal with oil behemoth Chevron CVX.N for an asset swap, with Chevron making a payment as much as $400 million to the company. WDS stock lost as much as 1.7%.
New Zealand's benchmark S&P/NZX 50 index .NZ50 slipped as much as 1.4% to 12,689.910, marking its biggest intraday pct drop since Dec. 4.
Reporting by Nichiket Sunil in Bengaluru; Editing by Sherry Jacob-Phillips
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