Australian shares have struggled for momentum on Monday after falling to their worst week in more than two years as energy and mining stocks countered gains in banks.
The ASX 200 closed down 41 points, or 0.6 per cent to 6,433.
At the same time, the Australian dollar was up at 69.67 US cents.
The benchmark sank 1.8 per cent on Friday in its sixth straight session of falls.
Mining stocks fell about 5.1 per cent after benchmark iron ore prices extended losses on Friday as Chinese steel mills opted to reduce output amid weak profits and deteriorating demand prospects.
Sector heavyweights BHP, Rio Tinto and Fortescue skidded between 5.1 per cent and 8.6 per cent, with Fortescue touching its lowest level since March 17.
Energy stocks fell 5.2 per cent to be the biggest laggards on the main index, after oil prices dropped on Friday on worries that interest rate hikes by major central banks could cut energy demand.
Sector heavyweights Woodside Energy and Santos skidded 4.9 per cent and 6 per cent respectively.
Financials rose 0.6 per cent after a nine-session losing streak, with the "Big Four" banks trading in positive territory.
The Commonwealth Bank, the country's biggest lender, led gains with a 0.3 per cent rise, while Westpac was flat.
Among individual stocks, Infomedia jumped 7.4 per cent and was headed for its best day since May 16 after receiving a $638.8 million buyout proposal from US-based software company Solera Holdings LLC.
Among the top movers were Pointsbet (+18.6pc), Harvey Norman (+4.5pc) and Home Consortium (+5.6pc).
Meanwhile, Lake Resources (-13.7pc), Bega Cheese (-8.1pc), De Grey Mining (-10.2pc) and Beach Energy (-8.3pc) were among the worst performers.
Brent crude oil was up, trading at $US113.51 a barrel, by 4:38pm AEST.
Biggest weekly loss since 2020
World stocks on Friday closed out their steepest weekly slide since the pandemic meltdown of March 2020, as investors worried that tighter monetary policy by inflation-fighting central banks could damage economic growth.
The US Federal Reserve's biggest rate hike since 1994, the first such Swiss move in 15 years, a fifth rise in British rates since December and a move by the European Central Bank to bolster the indebted south all took turns roiling markets.
The Bank of Japan was the only outlier in a week where money prices rose around the world, sticking on Friday with its strategy of pinning 10-year yields near zero.
After sharp early losses, world stocks steadied somewhat to end Friday's session down by just 0.12 per cent.
The weekly slide of 5.8 per cent was the steepest since the week of March 20, 2020.
Wall Street's Dow Jones Industrial Average slipped 0.13 per cent, the S&P 500 added 0.22 per cent, and the Nasdaq Composite jumped 1.43 per cent.
For the week, the S&P 500 dropped 5.8 per cent, also its biggest fall since the third week of 2020.
"Inflation, the war and lockdowns in China have derailed the global recovery," economists at Bank of America said in a note to clients, adding they see a 40 per cent chance of a recession in the United States next year as the Fed keeps raising rates.
The Fed on Friday said its commitment to fight inflation is "unconditional". Fears that its rate hikes could trigger a recession supported Treasury prices and slowed the rise in yields, which fall when prices rise.
Ten-year Treasury yields retreated to 3.22944 per cent after hitting an 11-year high of 3.498 per cent on Tuesday.
'Global central bank policy momentum is all one way'
Southern European bond yields dropped sharply after reports of more detail from ECB President Christine Lagarde on the central bank's plans.
"The more aggressive line by central banks adds to headwinds for both economic growth and equities," said Mark Haefele, chief investment officer at UBS Global Wealth Management.
In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan fell to a five-week low, dragged by selling in Australia.
Japan's Nikkei fell 1.8 per cent and headed for a weekly drop of almost 7 per cent.
Bonds and currencies were jittery after a rollercoaster week.
The yen tanked after the Bank of Japan stuck to its ultra-accommodative policy stance.
The yen fell 2.2 per cent by late Friday, bolstering the US dollar, which rose 0.73 per cent against a basket of major currencies.
Sterling fell 1 per cent in New York as investors focused on the gap between US and UK rates.
The Bank of England is opting for a more moderate approach than the Fed.
"Markets may just be continuously adjusting to an outlook for higher global policy rates … as global central bank policy momentum is all one way."
ABC/Reuters
