Australia: Shares subdued, gains in financials offset by energy stocks; NZ up

[BENGALURU] Australian shares were sluggish on Friday afternoon with financials supporting the market although a stronger US dollar hit gold and oil prices, sending materials and energy stocks lower.

The dollar reached 14-year highs against a basket of major currencies on the back of the US Federal Reserve's rate hike and signal of three more rate hikes in 2017. An expected boost to US economic growth under President-elect Donald Trump also underpinned the greenback.

The S&P/ASX 200 index was flat at 5537.1 points as at 0137 GMT as gains in financials and industrials were offset by losses in gold and oil stocks.

"Markets are betting on the underlying strength of the US economy and clearly the interest rate direction given by Federal Reserve," said James McGlew, executive director of corporate stock-broking at Argonaut.

The benchmark gold index slumped to its lowest in over 8 months, falling as much as 6.1 per cent.

The index was dragged down by Newcrest Mining, the biggest stock on the index by market value, which fell over 6 per cent.

The metals and mining index fell over 0.7 per cent with declining iron ore prices adding to the pressure as Chinese iron ore futures dropped for a second session on Thursday.

Mining giant BHP Billiton, which also has significant oil interests, fell 0.2 per cent.

Fortescue Metals, however, was one of the top gainers on the metals index, as it reassured investors with a further US$1 billion repayment of a 2019 senior secured credit facility.

Oil stocks, which rallied hard earlier this week after global producers struck a deal to cut output, tumbled as a stronger greenback pressured demand for dollar-denominated crude.

Woodside Petroleum, bellwether of the Australian oil sector, was 1 per cent lower. Beach Energy fell to over two-week lows, losing 2.4 per cent.

On the brighter side, financial stocks posted gains with the benchmark financial index rising as much as 0.25 per cent. Commonwealth Bank of Australia was among the top gainers, up 0.5 per cent.

Financials and industrials at home have tracked a rally in their US peers - the biggest beneficiaries Trump's election win as markets bet the new administration will boost spending on infrastructure, cut taxes and simplify regulations.

Industrials led the gains, driven up by a nearly 2 per cent rise in construction firm CIMIC Group's shares.

New Zealand's benchmark S&P/NZX 50 index was up 0.7 per cent, or 49.56 points, at 6798.18.

The index was supported by utilities and industrials with Meridian Energy rising 1.8 per cent and Auckland International Airport gaining 1.6 per cent.

REUTERS