FX.co ★ Australia Shares Fall Sharply Ahead of Labor Data

Australian shares dropped 116 points, or 1.3%, to 8,649 in early trade on Thursday, erasing the modest gains of the previous three sessions as overnight weakness on Wall Street flowed through to local markets. Sentiment was pressured by a sharp rise in U.S. bond yields, renewed inflation concerns, and escalating tensions in the Middle East that pushed oil prices above USD 103 per barrel. Caution also increased ahead of the August labour-force report due later today, following July’s unexpected rise in the unemployment rate and a fall in total employment.

Adding to the cautious tone, RBA Assistant Governor Sarah Hunter warned that cash rates may need to rise again if inflation remains elevated, reinforcing market expectations—shared by the four major banks—that the central bank will hike rates next week. All sectors traded lower, led by manufacturing, non-energy minerals, and financials. The big four banks slipped between 1.7% and 1.9%, while notable declines were seen in PLS Group (-4.9%), Lynas Rare Earths (-4.6%), and Nextdc (-3.5%). Traders are also looking ahead to a planned bilateral summit later today between U.S. President Donald Trump and Chinese President Xi Jinping.