Why did Australian shares slump to a two-month low on Friday, and which sectors were most affected?

Australian shares slumped to a two-month low on Friday primarily due to falling commodity prices—especially copper—and heightened inflation concerns driven by surging oil prices and ongoing Middle East conflict, prompting a broad 'risk-off' investor sentiment. The benchmark S&P/ASX 200 index fell 0.9% to 8,741.20—the lowest closing level since July 2—and lost 2.1% for the week, its steepest weekly drop since mid-March. Heavyweight miners led the decline, plunging 3.7%—their steepest fall since June 19—with BHP down 4.1% (its worst session since mid-June) and Rio Tinto down 3.5%; lithium miners Liontown and Pilbara Minerals tumbled 8.6% and 7.4%, respectively. Meanwhile, financials bucked the trend, rising 1.1%—their best session in nearly two weeks—after three consecutive losing sessions.

What macroeconomic factors contributed to increased expectations of further interest rate hikes by the Reserve Bank of Australia?

Increased expectations of further RBA interest rate hikes were driven by hawkish signals from RBA governors combined with higher energy prices—particularly oil, which held above $100 a barrel amid fears of prolonged supply disruptions—fuelling persistent inflation concerns. As a result, markets priced in 32 basis points of rate hikes by November and 39 basis points by December, while yields on both short-term and long-term Australian government bonds surged above 5%, reaching their highest levels since mid-2011 amid a global bond selloff.

Australian shares slump to two-month low as miners fall

Sep 11, 2026

Australian stocks hit a two-month low as mining giants like BHP and Rio Tinto slumped on weaker copper and lithium prices. Rising oil costs and inflation fears further pressured the market amid expectations of interest rate hikes.

reuters

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Australian shares slump to two-month low as miners fall

Australian shares slump to two-month low as miners fall

FAQ