Australia: Shares flat; set for worst week in over two months on China worries

AUSTRALIAN shares were flat on Friday, but were on track for a second straight weekly loss as weakness in underlying commodity prices due to China’s fresh Covid-19 restrictions dragged down domestic miners and energy stocks.

The S&P/ASX 200 index fell 0.03 per cent to 6,843.8 by 0111 GMT and was on track for its biggest weekly drop since June 17.

The benchmark ended 2 per cent lower on Thursday and is down 3.8 per cent this week.

The economic outlook of China, Australia’s top trading partner, has been dulled by persistent weakness in its property and manufacturing sectors, which together account for half of the country’s gross domestic product, and the recovery is already threatened by disruptions from fresh Covid-19 curbs.

Export-reliant miners were the top losers on the benchmark index, shedding 1.6 per cent after iron ore futures slipped overnight.

Sector leaders BHP, Rio Tinto and Fortescue Metals shed between 2.4 per cent and 3.1 per cent.

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World stocks fell overnight amid persistent worries about rising global interest rates and slowing pace of global economic growth.

In Australia, a Reuters poll of economists found that the country’s central bank will raise the cash rate by another half-point on Tuesday to curb soaring inflation but will moderate the pace of hikes for the remainder of the year.

Energy stocks skidded 1.3 per cent, after oil prices tumbled more than 3 per cent overnight, as new Covid-19 lockdown measures in China added to worries that high inflation and interest rate hikes are denting fuel demand.

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Sector behemoths Woodside Energy and Santos dropped 1.3 per cent and 0.5 per cent, respectively, with Woodside hitting lowest in over a week.

In contrast, Financials rose 0.8 per cent, with all “Big Four” banks gaining between 0.1 per cent and 0.4 per cent.

Across the Tasman Sea, New Zealand’s benchmark S&P/NZX 50 index fell 0.15 per cent to 11,592.9. REUTERS