Australian shares extended falls to drop 1.6 percent on Tuesday as traders played catch-up to a major sell-off in Chinese stocks the previous day, which sent shockwaves around the globe. A semblance of calm returned to Chinese stocks on Tuesday with the CSI300 index of the largest listed companies in Shanghai and Shenzhen eking out a 0.8 percent gain in choppy trade.
Australia's S&P/ASX 200 index fell 86.08 points to 5,184.4 at the close of trade, a level last seen on December 24. This is the third consecutive day of loss for the benchmark and the biggest intra-day percentage drop since December 14. China is Australia's major trading partner. New Zealand's benchmark S&P/NZX 50 index fell 0.7 percent or, 46.16 points to finish the session at 6,278.10, after hitting successive record highs in the past week.
"The New Year has not been kind to local traders," said Chris Conway, Head of Research at Australian Stock Report. The Australian market jumped 2.5 percent to a two-month high in December following a nine-day rally. However, it ended the year more than 2 percent down as slumping iron ore and metal prices hit bluechip mining stocks, while stringent capital rules hurt the heavyweight banking sector. The New Zealand exchange soared 13.5 percent in 2015. All sectors traded in the red on Tuesday with financials weighing the most on the index. The "Big Four" banks - CBA, National Australia Bank, ANZ and Westpac - were down 0.8-1.5 percent. Top investment bank Macquarie fell more than 1 percent.
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