Australia’s sharemarket came under pressure on Monday, 31 August, as a sharp rise in oil prices and renewed expectations of higher interest rates weighed on investor sentiment, while the Australian dollar slipped from a 15-week high.
The S&P/ASX 200 closed down 16.3 points, or 0.18 per cent, at 9,076, while the broader All Ordinaries index fell 0.25 per cent to 9,271.4. Despite the decline, the benchmark recorded a fifth consecutive month of gains, rising 1.11 per cent during August. ([countrynews.com.au](https://www.countrynews.com.au/aap-finance/aussie-shares-waver-on-us-rate-fears-as-oil-climbs/?utm_source=openai))
Oil prices climbed as renewed tensions in the Middle East heightened concerns about disruption to energy supplies. October crude futures rose 2.53 per cent to US$85.51 a barrel, while Brent futures gained 5.09 per cent to US$90.50. ([investing.com](https://www.investing.com/news/stock-market-news/australia-stocks-lower-at-close-of-trade-spasx-200-down-018-4882170?utm_source=openai))
The higher energy costs added to inflation concerns, particularly after data showed Australian consumer prices had risen more than expected. Markets moved to price in a greater chance of a 25-basis-point increase by the Reserve Bank of Australia at its September meeting. ([brecorder.com](https://www.brecorder.com/news/amp/40437205?utm_source=openai))
The RBA left its cash rate unchanged at 4.35 per cent in August, but Governor Michele Bullock said the board would raise rates again if necessary to bring inflation down. The central bank has warned that a further escalation of the Middle East conflict could push oil prices and broader inflation higher. ([rba.gov.au](https://www.rba.gov.au/speeches/2026/mc-gov-2026-08-11.html?utm_source=openai))
Gold and mining shares were among the weakest performers. Northern Star Resources fell 5.23 per cent, while Greatland Resources dropped 6 per cent, as a more hawkish outlook for US monetary policy reduced demand for non-yielding assets. ([investing.com](https://www.investing.com/news/stock-market-news/australia-stocks-lower-at-close-of-trade-spasx-200-down-018-4882170?utm_source=openai))
Bank stocks offered some support, with the major lenders advancing as much as 1.8 per cent. However, the gains were not enough to offset losses among materials, gold and technology companies. ([brecorder.com](https://www.brecorder.com/news/amp/40437205?utm_source=openai))
The Australian dollar was buying about 71.66 US cents, down from 71.99 US cents at the close on Friday, after briefly reaching its highest level in 15 weeks. ([countrynews.com.au](https://www.countrynews.com.au/aap-finance/aussie-shares-waver-on-us-rate-fears-as-oil-climbs/?utm_source=openai))
