ASX 200 Slides Below 8,830 as US Midterm Jitters and RBA's Fifth Rate Hike Weigh on Australian Shares

SYDNEY — Australian shares fell Wednesday afternoon as investors braced for the outcome of U.S. midterm elections and digested a fresh interest rate increase from the Reserve Bank of Australia, with financial and health care stocks leading the decline.

The benchmark S&P/ASX 200 index was down 63.8 points, or 0.72%, at 8,823.0 as of 2:29 p.m. AEDT. The index had opened sharply lower and spent most of the session in negative territory, giving back more than the modest gain it recorded a day earlier.

On Tuesday, the ASX 200 had a volatile but positive day, ending the session 0.35% higher at 8,886.8 points. That advance followed a weak start to the week. On Monday, the index fell 0.58%, with losses in gold, metals and mining, and consumer staples stocks leading the market lower.

Weak open sets the tone

Futures trading had pointed to a soft start. SPI futures signaled the ASX 200 would open 41 points, or 0.45%, lower following a mixed session on Wall Street, where the Dow Jones fell 0.45% while the S&P 500 rose 0.35% and the Nasdaq climbed 0.75%.

The selling proved deeper than expected. The S&P/ASX 200 dropped 63.40 points, or 0.71%, to 8,823.40 by 10:10 a.m. AEDT, with consumer discretionary stocks taking the biggest early hit.

By late morning, the losses had broadened. The financial and health care sectors each fell 0.9%, making them the biggest laggards, while eight of the 11 sectors traded lower. Utilities was the best-performing sector, gaining 0.8%, followed by technology, up 0.7%, and energy, up 0.6%.

All eyes on Washington

Traders across the Asia-Pacific region were cautious as early results rolled in from the U.S. midterm elections, which will determine control of Congress for the remainder of President Donald Trump's term.

U.S. stock futures slid and the dollar softened as investors girded for results, with Democrats favored to capture the House and both parties locked in an intense state-by-state battle for the Senate. S&P 500 futures fell 0.5%, while Nasdaq futures dropped 0.9%.

Market strategists said the scale of the result could matter more than the winner. Chris Weston, head of research at Pepperstone, said the distinction between a narrow Democratic majority and a commanding victory was critical for traders, adding, "A narrow blue wave may be largely priced in."

Elsewhere in the region, Japan's Nikkei fell 1.4%, South Korea's Kospi slipped 0.5% and Hong Kong's Hang Seng eased 0.3% as of around 12:44 p.m. AEDT.

Rate hike adds to pressure

The selloff came a day after the Reserve Bank of Australia raised borrowing costs again. The central bank lifted the cash rate to 4.85% on Tuesday, citing domestic inflation, oil price pass-through and the artificial intelligence boom.

The increase was the fifth of 2026 and took the cash rate to its highest level since 2008, according to a Commonwealth Bank foreign exchange note. Westpac's chief economist Luci Ellis said the split vote and shifting risks made a December pause likely.

Lenders moved quickly to pass on the increase. National Australia Bank confirmed it would raise its variable home loan rates by 0.25 percentage point, effective Nov. 13.

The Australian dollar was little changed. The currency traded flat at 69.66 U.S. cents around midday. CBA's economists said they expected two, and possibly three, Federal Reserve rate hikes by March 2027, which would narrow Australia's interest rate advantage over the United States and diminish support for the local currency.

Spending data shows resilience

New economic data showed Australian consumers were still spending despite rising costs. Household spending rose 0.6% in September, according to seasonally adjusted figures from the Australian Bureau of Statistics, following a 0.1% fall in August and a 1% rise in July.

Fuel spending jumped 5.4% in the month, reflecting higher global oil prices and the end of fuel excise relief on Aug. 3, the bureau said.

Economists cautioned that the strength may not last. Marcel Thieliant, head of Asia-Pacific at Capital Economics, said much of the gain reflected rising prices, and forecast consumer spending would rise only around 1% next year as higher interest payments and inflation squeeze real incomes.

Commodities mixed

Resources stocks faced a mixed backdrop. Copper slumped to a seven-week low, slipping 2.2% on the London Metal Exchange to settle at $14,036 a tonne on Tuesday, as traders reassessed the artificial intelligence trade and the prospects for Middle East diplomacy.

Gold has retreated sharply from its peak earlier in the year. The precious metal hit a record of about $5,589 an ounce in January but has since fallen roughly 30% to around $3,920. Gold miners such as Westgold Resources and Northern Star Resources were flagged as at risk heading into the session after the gold price fell overnight.

Oil prices remained elevated but volatile. Brent crude futures rose 0.8% to $104.47 a barrel around midday, after prices slid to a four-week low in the previous session as investors weighed talks aimed at ending the wars in Ukraine and Iran. Iron ore edged up 0.6% to $91.55 a tonne.

Corporate news

Several companies made headlines during the session. The High Court of Australia dismissed Uber's appeal in full, leaving the rideshare company to pay $81 million in payroll tax in New South Wales.

In the technology sector, privately held design software company Canva announced a sweeping restructure. The company said 1,271 people, or 22% of its workforce, would be affected through role changes, relocations or job losses.

Industrial property group Goodman Group said in an operational update that its data center development projects remained on track. Westfield owner Scentre Group told the exchange that David Jones occupies space at 17 of its centers and had paid all rent up to Sept. 30.

Analysts also adjusted their views on several stocks. Morgans issued trim ratings on Westpac following its results release this week, with a price target of $32.32, and on Boss Energy, with a target of $1.35.

Outlook

With U.S. election results still being counted and the RBA signaling a possible pause, traders said near-term direction for Australian equities would likely hinge on how decisively the congressional races are settled and how bond markets respond. The U.S. 10-year Treasury yield rose to 4.96% overnight after job vacancies topped expectations.

The ASX 200 remains on track for its second losing session in three days ahead of Wednesday's 4 p.m. close.