Australia: Shares end lower on mining losses

[SYDNEY] Australian shares closed lower on Friday, dragged by mining stocks after Chinese iron ore futures slid, with the benchmark index posting its sharpest weekly loss since late-October.

The S&P/ASX 200 index reversed early gains to end 0.6 per cent lower at 6,607.4 and post a weekly loss of 2.8 per cent. Markets on Friday tracked a drop in US futures and broader Asian equities.

Asian markets were spooked that a coordinated assault by small traders organising over online forums to force US hedge-funds to reverse short positions - which has led to sharp volatility in some stocks - could spill over into other markets.

Other brokers, however, said the situation was unlikely to play out on such a scale again.

"I think the Gamestop situation is a one-off in the larger scheme of things. We have got an extra-ordinary market situations driving this and that will be rectified. You'd imagine that the hedge-funds will cover their shorts," said James McGlew, executive director of corporate stockbroking at Argonaut.

Miners closed 1.8 per cent lower and clocked their worst week since March 13, 2020 with a 6.6 per cent weekly drop. Demand worries dented Chinese iron ore futures in recent sessions after the commodity's sharp rally towards the end of 2020.

Rio Tinto fell 3 per cent and hit its lowest in nearly two months, while rival BHP dropped 1.6 per cent. Both companies enjoyed sharp share gains last year, benefiting from soaring prices of the commodity.

New Zealand's benchmark S&P/NZX 50 index closed 0.3 per cent higher at 13,127.29.

REUTERS