ASX Market Wrap: Australian Shares Slip as Fed Chair Kevin Warsh Revives Rate Hike Concerns

Key Highlights

• ASX 200 falls 0.42% as global markets react to a more hawkish US Federal Reserve

• Fed Chair Kevin Warsh signals inflation remains a priority despite holding rates steady

• Gold rises nearly 1.5% as investors seek safe-haven assets

• Technology and mining stocks lead declines on the ASX

• Energy and healthcare sectors outperform amid broader market weakness

Australian shares edged lower on Thursday as investors digested a major shift in the global interest rate outlook, with the first Federal Reserve meeting under new Chair Kevin Warsh reviving concerns that borrowing costs may rise again later this year.

The S&P/ASX 200 slipped 0.42% to 8,928.2 points by late morning trade, while the All Ordinaries fell 0.41% to 9,148.0 points.

The weakness followed a broad sell-off on Wall Street overnight, where investors moved away from growth stocks after Federal Reserve officials signalled that inflation remains a bigger concern than previously expected.

While the Fed left rates unchanged, markets focused on what came next.

Several policymakers indicated they expect at least one interest rate increase before the end of 2026, pushing US bond yields sharply higher and prompting a reassessment of risk assets across global markets.

The two-year US Treasury yield recorded its biggest one-day jump since last year’s tariff-driven volatility, reflecting growing expectations that rates could rise as early as October.

Warsh’s first meeting rattles markets

The central theme dominating financial markets was not the Fed’s decision to hold rates steady, but the tone coming from its new leadership.

Kevin Warsh, who officially chaired his first Federal Open Market Committee meeting this week, reinforced the central bank’s focus on inflation, even as economic growth begins to moderate.

Kyle Rodda, Senior Financial Market Analyst at Capital.com, said markets were still trying to understand exactly what kind of Fed Chair Warsh would become.

“Is Warsh the hawk he once was as a governor back in the noughties, or the dove he presented himself as ostensibly to secure the nomination from US President Donald Trump? Perhaps like how a leopard never changes its spots, a hawk never changes its feathers. Kevin Warsh presented a vision of an inflation-focused Fed whose first order of business is getting price growth back under control.”

The comments sparked renewed caution across equity markets globally.

Wall Street’s major benchmarks all finished lower, with the Nasdaq dropping 1.34%, the S&P 500 losing 1.21%, and the Dow Jones falling 0.98%.

Technology stocks lose momentum

The shift in rate expectations hit technology companies particularly hard.

Higher interest rates typically reduce the appeal of growth stocks because future earnings become less valuable when discounted at higher borrowing costs.

Chris Strazzeri, Dealing Manager at Moomoo Australia & New Zealand, said investors quickly moved away from high-growth sectors.

“Investors turned cautious in response to the Federal Reserve’s decision. They sold growth stocks, particularly the technology sector, with Meta falling 5.44% and Microsoft dropping 3.8%. Further highlighting the broader move away from growth names, SpaceX fell 4.95%, marking its first negative session since listing last week. The VIX fear gauge jumped 12.31%… a reminder that confidence remains fragile.”

ASX Sector Snapshot | Source: MarketIndex 

Locally, the ASX All Technology Index eased 0.06%, while the broader information technology sector was the weakest performer, down 1.13%.

Gold shines while iron ore weakens

As risk appetite cooled, investors sought shelter in traditional defensive assets.

Spot gold climbed 1.50% to US$4,323.35 an ounce, extending its strong run as geopolitical uncertainty and inflation concerns continue to support demand.

Meanwhile, iron ore remained under pressure.

The steelmaking commodity slipped 0.7% to US$100.80 a tonne after briefly falling below the closely watched US$100 threshold during recent trading.

Commodities Price Index | Source: MarketIndex 

Vivek Dhar, Commodities Analyst at Commonwealth Bank, said China’s property downturn continues to weigh heavily on steel demand.

“Construction remains the key point of weakness for China’s steel consumption given the ongoing deterioration in China’s property and infrastructure sectors. Iron ore has struggled to remain below US$100 per tonne in recent weeks mostly because of higher operating costs due to elevated diesel prices.”

Brent crude oil also eased 1.44% to US$78.40 a barrel as traders continued to unwind geopolitical risk premiums following recent Middle East ceasefire developments.

Winners and losers on the ASX

Sector performance painted a mixed picture.

Energy rose 0.57%, healthcare gained 0.53%, and consumer staples advanced 0.40%.

On the other side of the ledger, financials fell 0.71%, materials lost 0.89%, and technology stocks led declines.

Among individual movers, BENZ Mining (ASX: BNZ) surged 11.17% to $2.09, while PYC Therapeutics (ASX: PYC) climbed 7.49%.

Beacon Minerals (ASX: BCN) gained 6.58% after announcing a substantial shareholder return package.

Deep Yellow (ASX: DYL) also attracted buyers, rising 5.54% as uranium stocks continued to benefit from long-term energy security themes.

Among the laggards, Tungsten Mining (ASX: TGN) dropped 8.33%, Emeco Holdings (ASX: EHL) fell 7.46%, and Silver Mines (ASX: SVL) lost 5.17%.

One surprise came from TPG Telecom (ASX: TPG), which rose 0.96% despite a widespread network outage that disrupted services for millions of Vodafone, TPG and iiNet customers.

Markets shift focus back to rates

While domestic developments including changes to small-business capital gains tax concessions generated headlines, they had little influence on market direction.

Instead, global investors are once again focused on the same question that has shaped markets for much of the past two years: how long interest rates will remain elevated.

With the Federal Reserve adopting a firmer tone under Kevin Warsh and inflation still proving stubborn across major economies, hopes for a smoother path toward lower borrowing costs have faded.

For now, markets appear willing to take a pause, reassess valuations, and wait for clearer signals from central banks before making their next move.