Fed stays on hold, Wall Street slides, oil jumps, ASX set to fall
Staff writers
Updated ,first published
Australia’s share market fell again in early trade, continuing its losing streak after the country’s largest supermarket chain warned of rising inflation pressures due to war, sending consumer staples into decline.
The S&P/ASX was down 24.80 points, or 0.3 per cent, at 8662.20 at 11.15am AEST despite eight of 11 industrial sectors advancing. Woolworths shares tumbled 6 per cent after the grocery giant said full-year profits for Australian supermarkets would be at the low to mid end of its forecast as the war in the Middle East increased fuel and other supply costs. The warning also affected its biggest rival Coles, which lost 3.3 per cent in early trade.
Another increase in oil prices overnight also damaged investor confidence, sending the local stock market heading for an eighth consecutive day of losses. The ASX fell 0.3 per cent on Wednesday. The Australian dollar rose 0.1 per cent to 71.26 cents after local inflation figures – although not as bad as feared – approached a three-year high on Wednesday, supporting bets that the Reserve Bank would continue to raise interest rates.
Woolworths said food sales at Australian supermarkets were up 6.5 per cent in March and April so far and pledged to contain costs and boost productivity to help ease cost pressures, but warned that “higher fuel costs and knock-on effects are likely to have an increasing inflationary impact as we progress through the calendar year”.
“Conflict in the Middle East is creating greater uncertainty for our customers, suppliers and team at a time when cost of living pressures are already acute,” Woolies CEO Amanda Bardwell told the ASX.
Metcash, which supplies independent supermarket chains such as IGA, fell 2.5 per cent and dairy company A2 lost 1 per cent.
The materials sector also experienced a decline; mining giants BHP and Rio Tinto lost 1.6 percent, and Fortescue Metals lost 2 percent. Gold producers Northern Star (down 3.3 percent) and Evolution Mining (down 3 percent) fell as gold extended three days of losses after the Federal Reserve kept U.S. interest rates steady overnight and said the war in Iran was clouding the economic outlook. Bullion was down 3.4 percent this week at around $4,550 per ounce.
South32 shares tumbled 7.2 per cent after the silver miner said costs for its Taylor zinc-lead-silver project in Arizona would rise to about US$3.3 billion ($4.6 billion). It was also stated that production will start later than the previously marked time.
Meanwhile, tech stocks strengthened following encouraging results from US tech giants overnight, with local software makers WiseTech Global and Xero gaining 2.1 percent and 2.2 percent respectively, and data center operator NextDC gaining 0.8 percent. Financial stocks also gained value; All four major banks gained between 0.3 percent and 1 percent. Stock exchange operator ASX Ltd gained 4.5 percent after it appointed Darren Yip as interim boss, overseeing its markets and listings divisions, as part of a wider strategic review to dismantle its risk management and governance practices.
Energy stocks had another strong morning following the recent rise in oil prices. Oil prices rose to a new wartime high overnight as disruption to Persian Gulf energy supplies continued. The price of the main international oil, known as Brent crude, rose almost 8 percent as investors worried that the stalemate in U.S.-Iran talks could continue for some time. This could prevent Persian Gulf energy products from reaching the rest of the world for weeks or, in a worst-case scenario, months.
Shares in Woodside Energy and Santos rose 0.5 percent and 1.5 percent in early trading, while refiners Ampol and Viva Energy gained 1 percent and 1.3 percent, respectively. Alternative fossil fuel producers Yancoal and Whitehaven Coal gained 3.7 percent and 2.4 percent in value.
A quarter of high-profile earnings fell after the closing bell as stocks fluctuated overnight on Wall Street as investors juggled rising crude oil prices and the Federal Reserve’s interest rate announcement. The S&P 500 closed flat, the Dow Jones lost 0.6 percent and the Nasdaq composite rose.
The Fed left its benchmark interest rate unchanged for the third consecutive meeting, but signaled that it might still cut interest rates in the coming months; these moves attracted the most opposition since October 1992. Three officials opposed in favor of removing the reference to a future rate cut, while a fourth official, Stephen Miran, opposed in favor of an immediate rate cut.
Outgoing Fed chairman Powell said he will remain on the Fed board after his term as chairman ends for an “indefinite period of time.” The Senate Banking Committee previously approved Trump appointee Kevin Warsh, Powell’s successor, on a party-line vote.
After Wall Street’s closing bell, a number of major companies announced their results. Alphabet beat Wall Street forecasts for quarterly revenue growth at its cloud computing unit, driven by continued corporate spending on artificial intelligence infrastructure. The company’s shares increased by approximately 4 percent in extended trading.
Alphabet’s total revenue rose 22 percent to $109.9 billion in the first quarter, compared to a forecast of $107.2 billion, according to LSEG data.
Facebook owner Meta Platforms raised its annual capital spending forecast, doubling down on its decision to pour billions of dollars into AI infrastructure even as it seeks cost savings through planned layoffs. Its shares lost 5 percent in after-hours trading.
Microsoft shares fell 2 percent in after-hours trading after reporting third-quarter revenue of $82.9 billion.
Amazon shares lost 2.3 percent in after-hours trading, with total net sales up 17 percent to $181.5 billion.
Previously, the US stock market remained largely resilient as more companies reported stronger profit growth at the start of 2026 than analysts expected.
With AP, Bloomberg, Reuters
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