The S&P/ASX 200 Materials Sector Index (XMJ) fell 2.9% on Friday. Surging energy costs and weakening commodity prices triggered fears of margin compression.
Weekly rises in crude oil prices increased operational expenses for mining and industrial firms. Higher diesel costs represent a primary concern for the sector.
COMEX copper futures declined 1.8%. Gold futures dropped 1.5% overnight.
The gold sub-index plunged 4.9%. Renewed inflation fears and expected US interest rate hikes reduced the appeal of non-yielding assets.
Investors swiftly reduced exposure to materials and mining stocks due to rising costs and falling revenues. This dual pressure prompted a broad repricing of risk across the sector.