Australian shares slump to two-month low as miners fall

• Mining stocks plunged 3.7% in their steepest drop since June 19, with BHP falling 4.1% and lithium miners Liontown and PLS tumbling 8.6% and 7.4% respectively on copper tariff uncertainty and weak commodity prices
• Markets are pricing in 32 basis points of rate hikes by November and 39 bps by December, as hawkish Reserve Bank of Australia signals and oil prices above $100 per barrel fuel tightening expectations
• Australian government bond yields jumped above 5% to their highest levels since mid-2011 amid a global bond selloff, while financials provided limited support with a 1.1% gain

Australian Shares Fall to Two-Month Low on Mining Weakness and Inflation Fears

Australian stocks closed sharply lower on Friday, with the S&P/ASX 200 index falling 0.9% to 8,741.20 points—its lowest level since July 2. The index posted a weekly decline of 2.1%, marking the steepest drop since mid-March.

Key Drivers:

Mining stocks led the selloff, plunging 3.7% in their worst session since June 19. Major miner BHP tumbled 4.1%, while Rio Tinto shed 3.5%. Lithium miners experienced even steeper losses, with Liontown down 8.6% and PLS falling 7.4%. The decline followed weakness in copper prices amid White House uncertainty over refined copper tariffs and concerns about manufacturing cost impacts.

Market Implications:

Investors adopted a "risk-off" stance due to multiple headwinds:

• Oil prices held above $100 per barrel, raising inflation concerns despite easing from recent highs
• Hawkish signals from Reserve Bank of Australia governors increased rate hike expectations
• Markets now price in 32 basis points of rate hikes by November and 39 bps by December
• Australian government bond yields surged above 5% for both short and long-term securities—highest since mid-2011

The financial sector provided some relief, gaining 1.1% in its best session in nearly two weeks.

Regional Impact:

New Zealand's S&P/NZX 50 index fell 1% to 13,580.33 points, reaching its lowest close since late June. Investors await the country's June-quarter GDP data next week.

Portfolio manager Luke Winchester of Merewether Capital cited concerns that persistent inflation and Middle East tensions could prompt further policy tightening globally.