Australia: Shares hit four-week low ahead of central bank decision

[BENGALURU] Australian shares fell sharply on Tuesday to hit a four-week low, as rising diplomatic tensions with Beijing and a likely recession in the second quarter weighed on investor sentiment ahead of a central bank rate decision.

The S&P/ASX 200 index declined 2.4 per cent to 5,914.20 by 0125 GMT, its lowest since Aug 3, and was on track for a third straight session of losses.

China, Australia's largest trading partner, on Monday launched an investigation into alleged government subsidies of some Australian wine imports.

The investigation comes amid rising tensions between the two countries after Canberra called for an international inquiry into the origins of the novel coronavirus.

In a meeting later in the day, the Reserve Bank of Australia is likely to hold its cash rate at an all-time low to prop up the economy, which is widely expected to have plunged into recession in the second quarter.

Heavyweight financials were the top drags on the benchmark index, shedding up to 3 per cent. Both Commonwealth Bank of Australia and Westpac Banking Corp lost about 2.5 per cent.

The mining sector, heavily reliant on exports to China, fell 2.1 per cent to its lowest since mid-July. Top iron ore miners BHP Group and Rio Tinto were the top drags, falling 1.9 per cent and 1.7 per cent, respectively.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index traded without any disruptions, slipping up to 1.2 per cent.

The New Zealand stock market was hit by a fifth day of cyberattacks on Monday, crashing its website, but maintained trading after switching to a contingency plan for the release of market announcements.

On Tuesday, financials and healthcare stocks were the top drags, with NZ-listed shares of Australia and New Zealand Banking Group losing up to 3 per cent, while Fisher & Paykel Healthcare shed 4.8 per cent.

REUTERS