ASX 200 Falls 1% to Six-Week Low on Rate Fears, Oil Spike

The S&P/ASX 200 index dropped 1 per cent to 8,920.80 points on Tuesday, its lowest close since July 28 and the largest single-day decline since June 4. Financials led the sell-off with a 1.6 per cent fall, while technology stocks slid 1.8 per cent.

Brent crude hovered near US$97 a barrel after Iran threatened to target Gulf energy infrastructure, disrupting shipping through the Strait of Hormuz. Macquarie estimates only 7 million barrels a day now transit the strait, down from roughly 20 million before the conflict.

“Inflation remains the bank's "top priority" and it "won't tolerate" an extended spell above target.”

Westpac's consumer sentiment index tumbled 5.2 per cent to 84.4 in September, and NAB reported business confidence fell two points to -8 in August, with conditions turning negative for the first time in years. RBA assistant governor Sarah Hunter said inflation remains the bank's "top priority" and it "won't tolerate" a sustained period above target.

Swaps now price a 67 per cent chance of a quarter-point rate hike at the RBA's policy meeting later this month, up from below 10 per cent a month ago. Energy stocks bucked the trend, rising 0.2 per cent, while copper hit a record US$14,533 a tonne on the LME.

Core Lithium produced first spodumene concentrate from its restarted Finniss plant, lifting several lithium names. Wheat jumped nearly 3 per cent after weekend US-Russia talks failed to produce a breakthrough.