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Australia: Shares slump as futures changeover dims new leader's glow
[SYDNEY] Australian shares tumbled on Tuesday as the emergence of Malcolm Turnbull as prime minister elect failed to inspire investors, and falling commodity prices sent resources lower.
The changeover of futures contracts set to expire on Sept 15 also generated heavy trading in those derivatives, draining volume from the equities market and exaggerating the fall, a trader said.
Overnight, the ruling Liberal Party voted to oust Tony Abbott as prime minister in favour of Turnbull, a pro-business multi-millionaire former tech entrepreneur who is hugely popular with the electorate.
Despite Mr Turnbull's immediate promise to restore business confidence, the S&P/ASX 200 index followed overseas markets by falling 1.0 per cent or 52.4 points to 5044.1 by 0226 GMT. The benchmark is down 11 per cent since the start of August. "The business and investment community should see the transition to Mr Turnbull's leadership as a positive, but it's pretty clear investor focus is elsewhere," said Michael McCarthy, chief market strategist at CMC Markets Asia Pacific Pty Ltd. "We've got the expiration of the futures contract this week and that means the fund managers are largely distracted by the rollover." Banks led the decline, with Westpac Banking Corp and National Australia Bank each down nearly 2 per cent, while Australia and New Zealand Banking Group dropped 1.5 per cent and Commonwealth Bank of Australia lost 0.7 per cent.
Miners also lost ground after the prices of several key metals dropped overnight. BHP Billiton was down 0.8 per cent and rival Rio Tinto eased 1.5 per cent. BHP spin-off South32 slumped nearly 6 per cent.
Energy stocks followed the oil price lower, with takeover target Oil Search off by 2.8 per cent and Woodside, whose takeover proposal Oil Search was knocked back a day earlier, eased 0.4 per cent.
Free-to-air television broadcaster Seven West Media rose 8 per cent after announcing a share buyback, the biggest gainer on the benchmark index.
New Zealand's benchmark NZX50 share index edged up 8.0 points or 0.1 per cent to 5,673.85, supported by demand for utilities, while gains were tempered by selling in healthcare shares.
Mighty River Power rose 2.1 per cent, while telecommunications retailer Spark rose 0.5 per cent, recovering from the previous day's slide.
Kathmandu climbed 2.7 per cent amid speculation homewares and sport equipment retailer Briscoe Group may increase its offer for the struggling outdoorwear maker.
Fisher and Paykel Healthcare fell 0.7 per cent, while Ryman Healthcare slipped 0.4 per cent.