Australia: Shares snap 4 days of gains on China demand worries

AUSTRALIAN shares snapped a four-day winning streak on Friday (Oct 28), dragged down by heavyweight miners on China demand concerns, while technology stocks tracked their US peers lower ahead of a widely expected Federal Reserve (Fed) interest rate hike next week.

The S&P/ASX 200 index closed 0.9 per cent lower at 6,785.70, but rose 1.6 per cent for the week - its best since the week ended Oct 7.

Miners were the biggest laggards with a 4.5 per cent drop, as iron ore futures tumbled on mounting concerns about global steel demand and China’s economy, which has been hit by Covid-19 curbs and a property sector downturn.

Mining giants Rio Tinto, BHP Group and Fortescue fell between 4.4 per cent and 8.2 per cent.

“It’s like companies with exposure to China are being penalised, with investors realigning their portfolios with the priorities of President Xi Jinping and de-risking against companies that have built their business models on heavy selling to China,” said Jessica Amir, a markets strategist at Saxo Markets.

Tech stocks fell 2.2 per cent after the Nasdaq closed lower overnight as investors contended with solid economic data and a mixed bag of corporate earnings.

“The carnage is likely to continue. Plus, there is a lot of risk being taken off the table ahead of next week’s Fed meeting, where a 75 basis-point rate hike is expected,” she said.

Gold stocks fell 1.1 per cent, with bullion prices stuck in a very narrow range ahead of the Fed meeting next week.

Energy stocks slipped 0.5 per cent as oil prices declined after top crude importer China widened its Covid-19 curbs.

Shares of Ampol and Beach Energy were down 1.4 per cent and 0.6 per cent, respectively.

Financials bucked the trend to climb 0.4 per cent, with the big four banks climbing between 0.3 per cent and 0.9 per cent.

New Zealand’s benchmark S&P/NZX 50 index closed 0.3 per cent higher at 11,129.53. REUTERS