Australian stocks closed weaker on Friday after lower commodity prices dragged miners lower while concerns about the economic impact of severe floods in Queensland state added to the negative sentiment. While other major Asian markets were higher, Australian stocks have floundered with volumes thin in post-holiday trade this week although stronger industrials and consumer stocks cushioned some of the blow on Friday.
"The market seems very heavy and sluggish; these macro concerns hanging over it seem to have sapped any life from it. Couple this with the crucial release of tonight's US nonfarm payrolls and you have a recipe for keeping participants on the sidelines," IG Markets strategist Ben Potter said. Global miner Rio Tinto, which has mining operations affected by the flooding, fell 1.8 percent while BHP Billiton declined 1.2 percent.
Australia's coal industry is expected to face months of disruptions as reports emerged Friday of key rail and road links being washed away by flooding which was a major influence on the local market this week amid estimates the nation's economy could take a $5 billion hit.
Shares in miners affected by the floods have been hit although some brokers believe rising coal prices could benefit some stocks. Shares in Coal of Africa, which does not have exposure to the flood-stricken region, rose 8.9 percent to A$1.71. Coal haulage firm QR National initially fell 1.1 percent on local media reports that damage to its infrastructure from the flooding would significantly impact its earnings. The stock later recovered to trade 1.9 percent higher at A$2.71, outperforming the wider market.
Cockatoo Coal shares fell 4.0 percent after it said it expected production at a Queensland mine to be delayed several weeks. Australian stock market operator ASX Ltd made clear on Friday it expected miners and other flood-affected companies to make prompt disclosures to investors about the impact on their operations. So far, only a very few miners have issued detailed updates on the flood impacts.
"Certainly if we think a company might need some prompting, we may well put a call into them," an ASX spokeswoman said, adding that she was not allowed to comment on individual companies. The benchmark S&P/ASX 200 index closed 19.983 points lower at 4,705.0. New Zealand's benchmark NZX 50 index ended 8.772 points lower to 3,317.942.
"We are under performing because people now think that $5-$10 billion (economic impact from the floods) is a fair old dent in GDP but the bulls would argue that is the end of the interest rate hikes for the foreseeable future," said Damian Rooney, senior institutional dealer at Perth-based Argonaut. Consumer and industrial stocks cushioned the losses. Building products group CSR rose 3.6 percent after announcing details of a special dividend as it returns A$800 million to shareholders. Australian rare earths miner Lynas Corp fell 7.5 percent to A$1.915 following substantial gains in the stock since China cut its export quotas for rare earth minerals late last year. Rare earths explorer Arafura fell 7.5 percent.