Australia shares slide on commodities; NZ hits 12-week low

[BENGALURU] Australian shares fell on Wednesday, dragged down by commodities, amid a sour start to Wall Street's corporate earnings season and raised bets on a year-end Federal reserve interest rate hike.

The S&P/ASX 200 index fell as much as 0.84 per cent to 5,433.6 points, the lowest level since Sept 30.

Wall Street slipped as shares of Alcoa Inc and Illumina Inc nose-dived after disappointing quarterly reports, casting a pall over the market.

Australian markets were also affected by a weak Australian dollar which slumped to a three-week low, as its US counterpart strengthened on expectations of an interest rate hike by the Federal Reserve as early as December.

"Major factor weighing on the market at the moment is that strong (US) dollar and the impact that it is having on commodity prices," said Michael McCarthy, chief market strategist with CMC Markets.

Materials were the biggest drag on the benchmark index, responsible for nearly half of the index losses.

Global miner BHP Billiton and rival Rio Tinto shed over 2 per cent each. BHP spin-off South32 was down about 3 per cent, while Fortescue Metals Group fell 3.6 per cent.

Energy stocks fell as much as 1.8 per cent to post their biggest intra-day percentage loss in nearly a month as oil prices retreated from one-year highs on Tuesday, after Opec said it was trying to reach a global agreement to cap production for at least six months.

Oil major Woodside Petroleum Ltd fell 1.5 per cent, while Santos Ltd fell 2.3 per cent. "Clearly the industrial metals group has been tracking oil reasonably closely over the last few months and that fall in oil prices overnight has also weighed on the base metals," Mr McCarthy added.

Bucking the trend, shares of gambling entertainment group Tabcorp Holdings Ltd, rose 2.8 per cent, after the Australian state of New South Wales (NSW) reversed a ban on greyhound racing that was due to start next July.

New Zealand's benchmark S&P/NZX 50 index snapped prior day gains and inched down 0.24 per cent or 16.8 points, to 7,107.47, the lowest since July 19.

The New Zealand dollar skidded to 2-1/2 month lows on Tuesday, a second day of weakness, after the country's central bank bluntly warned that further policy easing would be needed to push inflation higher.

Declining issues outpaced advancers on the New Zealand exchange by a 1.8-to-1 ratio.

Materials and telecommunications accounted for nearly half of the losses on the benchmark.

Fletcher Building Ltd was the biggest percentage loser, declining 1.2 per cent.

Telecommunication service providers Spark New Zealand and Chorus Ltd also dragged the index lower, falling 0.6 per cent and 0.3 per cent respectively.

REUTERS