Australian shares fell sharply on Monday, led by financials and gold stocks, after a surprise drop in US unemployment doused hopes that the Federal Reserve would lean towards a slower pace of monetary policy tightening.

The S&P/ASX 200 index closed 1.4% lower at 6,667.8 in broad-based selling, marking its biggest daily fall since Sept. 26.

Last week, the benchmark had gained 4.5% in its best show since early October 2020.

Marcustoday Financial Newsletter’s senior analyst, Henry Jennings, predicted a volatile week ahead for the local bourse and said markets were likely to fall further with the banking sector remaining under pressure.

“Yields and oil prices tending higher with China negativity means the pressure will be on.

We could see the index below 6,600 (points) again,“ Jennings said.

Investors across the globe are awaiting the US inflation data due later this week for further clues about the pace of Fed rate hikes. In Australia, financials dropped 1.5%, giving up some of the previous week’s sharp gains.

The country’s “big four” banks retreated between 1.3% and 1.7%.

Gold stocks tumbled 4.7% as bullion prices fell to a one-week low.

Newcrest Mining and Northern Star Resources lost 4% and 4.4%, respectively.

Energy stocks gave up 1.2%, as investors booked profits after a report on slowing economic activity in China stoked concerns about global fuel oil demand.

Sector heavyweights Woodside Energy and Santos fell 0.7% and 1%, respectively.

Australian shares end lower as miners, banks decline

Miners slipped 0.9% even after iron ore prices hit a two-month high on shrinking portside inventory in top steel producer.

Aurelia Metals and Capricorn Metals were the top laggards on the sub-index, shedding 32.6% and 10.1%, respectively.

New Zealand’s benchmark S&P/NZX 50 index slipped 1.7% to 10,918.5.

Shares in Pushpay Holdings jumped 3.5% after the payments firm said it had received a revised, indicative, and non-binding buyout proposal.