Australian Stocks Set to Post Modest Weekly Drop

The ASX 200 closed nearly flat at 8,795 on Friday, reversing a modest decline in the prior session as traders assessed flash PMI data showing a further contraction in Australian factory activity and a deeper downturn in services in October. Meanwhile, U.S. stock futures fell after the Nasdaq posted its steepest daily decline since June Thursday, as high-profile earnings reignited concerns over AI spending. BHP Group tumbled 3.6% amid a sharp drop in copper production and regulatory concerns over Chinese trade agreements. Goodman Group also shed 3.6% amid mounting regulatory scrutiny and concerns over power-grid capacity for Australia's data center infrastructure. In contrast, the four major banks rose between 0.9%–4.4%, benefiting from a defensive rotation away from materials and tech stocks. For the week, the index eased 0.1%, snapping three straight weekly rises, on concerns over a potential fifth interest rate hike this year following hawkish comments from RBA Deputy Gov. Hauser.

Australian shares fell 28 points or 0.3% to 8,763 around noon on Friday, extending prior losses amid weaker U.S. stock futures after tech names on Wall Street sold off overnight on concerns that the AI trade may be faltering. Locally, fears of a fifth interest rate hike this year persisted after Reserve Bank Deputy Gov. Hauser said the inflation outlook "looks materially worse" than previous estimates. Meanwhile, flash October PMI was subdued, with both manufacturing and services sectors continuing to drop. Tech, non-energy minerals, and industrial services dragged the benchmark index, partly offset by strength in energy minerals and communications. BHP Group tumbled 3.1% due to lower copper output and softening iron ore prices. Gold stocks also slipped, dragged by Northern Star Resources (-2.5%) and Evolution Mining (-3.1%). In contrast, three of four big banks rallied, all up above 2%. For the week, markets are heading for the first weekly fall in four, down around 0.5% so far.

The ASX 200 fell 38 points, or 0.4%, to finish at 8,793 on Thursday, erasing modest gains in the previous session as U.S. stock futures weakened sharply amid higher oil prices and mounting concerns about AI investment. Caution also emerged ahead of Australia’s flash October PMI data due Friday. Meanwhile, Reserve Bank Deputy Governor Hauser said inflation remains more persistent than expected, with September headline CPI at 4%, reinforcing expectations of another rate hike in November. Consumer discretionary, mining, and energy stocks led declines, while gains in logistics, transport, and utilities helped limit losses. Fortescue slipped 4.5% after flagging its future cash balance and operations could face headwinds if ongoing talks with China's state-backed iron ore buyer drag beyond the end of the year. Codan Ltd. plunged 8.1% after an off-market block trade worth AUD 312 million, reportedly involving the sale of roughly 23% of the stake held by its largest individual shareholder.