Australian shares fell on Wednesday, led by declines in heavyweight banking stocks, as investors assessed the fallout from escalating global trade conflict after the latest round of US tariffs.
The S&P/ASX 200 index ended down 0.7% at 8,141.1 points, its lowest level since December 20.
The benchmark has lost 5.5% since hitting an all-time high scaled on February 14. US President Donald Trump’s 25% tariffs on Mexican and Canadian imports and doubling of duties on Chinese goods to 20% followed by retaliation from China and Canada continued to hamper risk sentiment.
Australia stands to lose if US tariffs on China trigger a global trade war since the country is “heavily integrated into and reliant on” the global economy, particularly China, Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser said.
Meanwhile, data showed the Australian economy expanded at the fastest pace in two years in the December quarter, with analysts predicting the modest revival should not prevent the RBA from cutting interest rates again.
“In the near term labour market and inflation data will be critical to the timing of the RBA’s next policy move given we don’t see today’s national accounts as shifting the dial one way or the other for the Board,” analysts at CBA said in a note.
Financials, which have been trading at high multiples to the benchmark index since last year, lost 1% on Wednesday, with the “Big Four” banks shedding between 0.9% and 1.4%.
“We are seeing some profit-taking in banks and funds going into the gold sector in these very uncertain times,” said Brad Smoling, managing director at Smoling Stockbroking. Gold stocks ended up 0.5%.
Australian shares fall on poor risk sentiment; retail sales, RBA minutes eyed
Consumer stocks slipped 3.6%, with top supermarket chains Woolworths and Coles falling 3.9% and 4.4%, respectively.
Energy stocks dropped 1.7%. New Zealand’s benchmark S&P/NZX 50 index closed 0.5% lower at 12,412.07 points.
Reserve Bank of New Zealand Governor Adrian Orr resigned in a surprise move, three years before his current term ends.
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