Australian shares closed lower on Monday, starting the second half of 2024 on a sombre note, as political uncertainties in Europe weighed on investor sentiment ahead of the minutes of the Reserve Bank of Australia’s latest policy meeting.

The S&P/ASX 200 index fell 0.2% to 7,750.7 at the close of trade. The benchmark rose 2.3% in the first half of the year after having risen more than 5% in the second half of 2023.

“The ASX 200 kicked off the week cautiously, with all eyes on two potentially history-changing elections in Europe,” Hebe Chen, a market analyst at IG Markets said.

“Sensible investors are busy digesting the results of the first round in France and pondering the implications for the rest of the week and months ahead.”

Investors are also cautiously awaiting the minutes of RBA’s last policy meeting, due on Tuesday, after data last week showed surprisingly strong inflation in May.

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“Further monetary tightening and an economy struggling to avoid recession will be the most notable hurdles in the months ahead,” IG Markets’ Chen said.

Investors are also assessing if and when the U.S. Federal Reserve will start cutting interest rates after data on Friday showed U.S. monthly inflation was unchanged in May.

Market pricing now points to about a 63% chance of a Fed cut in September, as compared to an even chance a month ago, according to the CME FedWatch tool.

In Sydney, interest rate sensitive financial stocks declined 0.5%, with the Commonwealth Bank of Australia and National Australia Bank falling 0.9% and 0.4%, respectively.

Technology stocks retreated 2.2% tracking Wall Street peers.

Mining stocks jumped 1.1% as iron ore prices rose on China stimulus hopes and better economic data.

New Zealand’s benchmark S&P/NZX 50 index advanced 0.6% to 11,789.39.