Australian shares fell for the third straight day on Wednesday dragged by the mining and healthcare sectors, while New Zealand’s stocks reversed early losses to trade higher after the country’s central bank indicated that its tightening cycle was over.
The S&P/ASX 200 index finished 0.6% lower at 7,213.8 points.
The benchmark fell 0.05% on Tuesday. Investors globally remained concerned about the standoff between U.S President Joe Biden and his Republican counterpart Kevin MaCarthy on the debt ceiling negotiations, which ended without any progress on Tuesday, even as a deadline for its decision looms next week.
“As long as the debt ceiling remains unresolved, risk appetite will be kept in check,” said Tim Waterer, chief market analyst at KCM Trade.
“This is why global equities are having a tough time mounting any sort of rally.” In the domestic market, miners lagged the most in the benchmark, losing nearly 1.7% due to weak iron ore prices in top steel producer China, with Rio Tinto and BHP Group falling about 2.5% and 1.9%, respectively.
The healthcare index followed suit, falling 1.1%, with sector-major CSL Ltd dropping in step. Besides, gold and energy stocks added about 0.5% and 0.7%, respectively, offering some respite to a weak bourse.
Australia shares end slightly lower on caution over US debt ceiling deal
Meanwhile, New Zealand’s benchmark S&P/NZX 50 index climbed 0.2% to finish the session at 11,995.27 points.
The Reserve Bank of New Zealand hiked the policy rate by a quarter point in its meeting while surprising markets by signalling that its rate tightening cycle will draw to a close, boosting shares in the Antipodean nation.
The central bank was among the first to start hiking rates from October 2021 in the aftermath of the COVID-19 pandemic. Some analysts now predict that the RBNZ could switch to cutting key interest rates due to the possibility of a recession in the coming quarters.
“Although the RBNZ reiterated its view that policy would need to be restrictive for the foreseeable future, we believe that an incipient recession will prompt the Bank to pivot to rate cuts before the year is out,” Capital Economics analysts wrote in a note.