Australian shares, in tandem with global markets, have edged lower, dragged by losses in technology and banking stocks as investors remain wary of potential rate hikes by the US Federal Reserve.

The ASX 200 closed down 58 points, or 0.8 per cent, to 7,176.

At the same time, the Australian dollar was down at 71.59 US cents.

Global equities traded lower after economic data from the US remained supportive of the Fed’s planned pace of interest rate hikes, potentially influencing central banks elsewhere.

Domestic technology stocks emerged as the biggest drag on the benchmark, shedding 2.5 per cent, for a third session of losses after tracking overnight declines on Wall Street.

Shares in sector majors Block, Xero and Computershare plunged between 1 per cent and 5 per cent.

Financials slipped over 1.2 per cent, with all of the so-called “big four” banks trading in negative territory.

The export-reliant mining sub-index fell over 0.3 per cent, even as iron ore prices continued to move upwards.

Sector giants BHP Group and Rio Tinto shed 0.1 per cent and 1.7 per cent respectively.

Lithium miners Pilbara (-0.9pc) and Allkem (-1.4pc) were also down.

Bucking the trend, energy stocks gained over 3.1 per cent on sharper oil prices after European Union leaders agreed on a phased ban on Russian oil, while the end of the COVID-19 lockdown in Shanghai raised demand prospects.

Woodside Energy jumped 5.2 per cent, to $31.75, after completing its merger with BHP’s oil and gas business.

It now has a market capitalisation of $60.34 billion.

Liontown gained 3.9 per cent, to $1.21, Origin advanced 2.7 per cent, to $6.07 and Whitehaven rose 1.6 per cent to $5.24.

Additionally, gold stocks edged 0.4 per cent lower on global inflation woes. 

Wall Street fall

Global equities fell on Wednesday after stronger-than-expected economic data was unable to assuage investor concerns of high inflation and an impending recession, driven partly by rising oil prices.

A report by the Institute for Supply Management (ISM) showed US manufacturing activity picked up in May as demand for goods remained strong, even with rising prices.

The survey followed data released last Friday showing US consumer spending, the largest contributor to American economic output, increased in April, even amid growing concerns of a recession.

Market sentiment, however, has remained bearish, due to the prevailing uncertainty caused by the pace of the US Federal Reserve’s interest rate hikes, and the impact of the Russia-Ukraine war on food and commodity prices.

“There’s a lot of uncertainty,” said Michael Ashley Schulman, chief investment officer at Running Point Capital in Los Angeles.

“If we have a recession, it would be strange and unusual with nearly full employment, companies still hiring and huge demand for things.”

The MSCI world equity index, which tracks shares in 50 countries, was down 0.8 per cent.

Meanwhile, the pan-European STOXX 600 index fell 1 per cent.

On Wall Street, all three main indexes ended lower, driven by stocks in the financials, healthcare, technology and consumer discretionary sectors.

The Dow Jones Industrial Average fell 0.5 per cent, to 32,813, the S&P 500 lost 0.8 per cent, to 4,101 and the Nasdaq Composite dropped 0.7 per cent, to 11,994.

“Rising interest rates and inflation are just compressing valuations,” Mr Schulman added.

“You may like a company, and it may be good and can continue to make profits, but the valuation must still come down because your base interest rate is rising.”

Oil prices continued to strengthen after the move by European Union leaders to gradually phase-out Russian oil, even as China ended its stiff COVID-19 lockdown in Shanghai, which could bolster demand for crude in an already tight market.

Brent crude oil was up, trading at $US115.83 a barrel, by 06:52am AEST.

ABC/Reuters