Australian shares finished down nearly 2% over the week as falling gold, oil and other commodity prices dragged related miners and producers lower.
CommSec market analyst Savanth Sebastian said gold’s declines to five-year lows and oil prices falling to less than US$50 a barrel triggered selling.
“Those were the big drivers of the pullback,” he said.
Australia’s S&P/ASX 200 index closed at 5,566.10, down 104.5 points, or 1.84%, over the five days.
Sebastian also commented investors were slightly nervous ahead of the US Federal Open Market Committee’s (FOMC) two-day meeting next week.
The FOMC is widely expected to leave interest rates unchanged this time round but raise them later this year. When US policymakers raise rates, it will be the first time since 2006, marking a fundamental shift for financial markets.
Gold index dives 14.7%
The S&P/All Ords Gold index slid 14.65% over the week, including a drop of 5.2% on Friday.
Sebastian said gold would normally benefit from any flight to safe-haven investments like that seen overnight in the US, but the low-inflation environment worldwide had created a fundamentally different environment.
“There is no inflation in the global economy and you’ve got the threat of a stronger US dollar over the next six months,” he said.
“Fundamentally the outlook for gold doesn’t look great.”
Australia’s largest listed gold miner, Newcrest Mining (ASX: NCM), led declines, shedding 14.6% over the week, including a loss of 4.8% on Friday, to $11.27.
Resources, energy down
The resources sector fell about 5.3% over the week.
Market heavyweight BHP Billiton (ASX: BHP) fell 7% to $25.27, its lowest close since late 2008, just after the global financial crisis emerged in earnest.
BHP Billiton was also hit by weaker oil prices.
The S&P/ASX 200 Energy index softened 3.4%, although it firmed slightly on Friday.
Oil producer Santos (ASX: STO) fell nearly 7% this past week to $7.16, even with its gain of 5 cents on Friday.
However, healthcare stocks withstood the selling, with the index down just 0.7% over the week.
Bionic ear maker Cochlear (ASX: COH) added 3.4% this week to $89.64, including a decline of 0.2% on Friday.
Sebastian said investors sought out health care stocks for their defensive characteristics.