Australia’s sharemarket declined sharply on Thursday amid growing concerns over a potential interest rate increase, driven by robust household spending and persistent inflationary pressures. The benchmark S&P/ASX 200 fell 89.6 points, or 0.98 percent, closing at 9038.2, while the broader All Ordinaries index dropped 95.6 points, or 1.02 percent, to 9243.2.

Currency markets saw the Australian dollar strengthen slightly against the US dollar, trading at US71.83 cents. Despite a generally weak trading day with most sectors falling, only two sectors closed higher, while nine experienced losses. The steepest declines were recorded in consumer discretionary and technology sectors, alongside major mining stocks.

Retail giant Wesfarmers led the losses after reporting weaker-than-expected financial results. Its shares fell 4.58 percent to $79.46. Other retailers, including JB Hi-Fi and Harvey Norman, declined 4.48 percent to $66.02 and 2.17 percent to $4.50, respectively. Technology companies also suffered declines, with Xero down 2.6 percent to $81.73, WiseTech Global slipping 3.28 percent to $39.55, and Technology One falling 2.74 percent to $31.64.

Iron ore producers experienced mixed results. BHP shares lost 1.48 percent to $66.40 and Rio Tinto edged down 0.52 percent to $178.70, while Fortescue Metals Group rose 0.85 percent to $17.70.

Data released this week showed household spending surged by 1.1 percent in July, contributing to increased market speculation about a potential interest rate hike. These figures followed Wednesday’s inflation report from the Australian Bureau of Statistics, which indicated headline annual inflation eased slightly to 3.5 percent from 3.8 percent the previous month. Meanwhile, the trimmed mean inflation rate, which excludes the most volatile items, remained steady at 3.6 percent.

Market participants now assess a roughly equal chance of the Reserve Bank of Australia (RBA) raising the cash rate to 4.6 percent when its board meets on September 29. Three of the country’s four major banks are projecting an interest rate increase by year-end, although Westpac has yet to update its outlook.

National Australia Bank chief economist Sally Auld highlighted inflation pressures and resilient economic activity as key factors underpinning a likely rate hike. “July CPI data showed inflation running hotter than the RBA expected in early August, and the RBA has repeatedly signalled in recent weeks that the Monetary Policy Board would act if upside risks to inflation were realised,” she said. Auld also noted the potential for an additional rate increase in November should economic indicators remain strong.

On the corporate front, Wesfarmers reported a full-year net profit of $2.87 billion, down 1.8 percent compared with the previous year, despite solid performances from Bunnings and Kmart. Conversely, Officeworks detracted from the company’s overall earnings.

Shares in Qantas surged 4.77 percent to $9.66 following the release of the airline’s full-year results showing a 13.1 percent decline in profit to $2.06 billion, attributed largely to soaring fuel costs that inflicted a $420 million impact.

Corporate Travel Management, facing financial distress, announced it would refund $91 million to customers and remediate an additional $55 million in amounts owed to three major clients. The travel management company, which reported a $346.7 million loss mainly due to goodwill impairments, narrowly met the deadline to release its 2025 financial year results, amid the prospect of being delisted. Its shares remain suspended.