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Australia: Shares fall on weak commodity prices
[SYDNEY] Australian shares reversed early gains and fell sharply by mid-session on Tuesday as tumbling commodity prices and expectations that the central bank has stopped cutting rates weighed on investors.
A lower Australian dollar failed to attract foreign investors and a bounce in the iron ore price failed to stop investors selling resources stocks led by sharp drops in the prices of oil and base metals.
The Reserve Bank of Australia is widely expected to keep interest rates on hold after its monthly meeting on Tuesday.
The S&P/ASX 200 index was down 52.4 points or 0.9 per cent at 5683.0 by 0243 GMT. "Investors have major concerns about those commodity prices overnight," said CMC Markets chief strategist Michael McCarthy.
Investors expect no interest rate cut but "the potential for a shift in thinking about shares is quite high if the RBA explicitly confirms an easing bias", McCarthy added.
Bank stocks, seen as benefiting from rate cuts since these lower the appeal of bonds, led the benchmark lower. Commonwealth Bank of Australia and Westpac Banking Corp both dropped 1 per cent while National Australia Bank eased 0.7 per cent and Australia and New Zealand Banking Group declined 0.3 per cent.