Australia, New Zealand: Shares buckle under trade war strain

[BENGALURU] Australian shares tracked a global selloff on Thursday, with mining stocks leading the losses, eroding part of last week's rally as the drawn-out Sino-US trade war weighed on investor sentiment.

The S&P/ASX 200 index was 0.7 per cent, or 45.4 points, lower at 6,394.6. The benchmark has lost over 1 per cent since it scaled an 11-year high on Wednesday and the lack of any positive drivers out of the US-Sino trade war saga has only fuelled risk-averse selling.

"The rally has well and truly run out of steam on a technical basis and on a fundamental basis," said James McGlew, Executive director of corporate stockbroking at Argonaut.

"Markets can price risk well but they can't price uncertainty ... the uncertainty is driving sellers to have the upper hand today."

Additionally, Fitch Ratings said despite positive commodity prices, it expects Australia's 2019 gross domestic product growth to hit its lowest since the 2008-2009 global financial crisis.

Weakness in global commodity prices on Thursday hit local mining and energy stocks, sending both about 1 per cent lower.

Mining major Rio Tinto Ltd fell as much as 2.5 per cent, while the world's biggest miner BHP Group also dipped 1.1 per cent.

Oil and gas heavyweights Santos and Woodside Petroleum lost 1.7 per cent and 1 per cent, respectively.

Even gold stocks, typically considered a safe investment in times of turmoil, gave up earlier gains to fall as much as 0.4 per cent. Evolution Mining Ltd lost as much as 0.8 per cent.

However, rare earths miner Lynas Corporation Ltd bucked the wider trend to gain for a fourth session and touch its best level in over five years.

Mr McGlew said Lynas and other rare earth firms such as Northern Minerals Ltd and Peak Resources stand to gain after opinion pieces in Chinese media warned Washington a ban on Huawei could result in tightened access to China's rare earths.

New Zealand's benchmark S&P/NZX 50 index fell 0.3 per cent to 10,067.30 by 0156 GMT.

Dairy group Fonterra said its New Zealand milk production fell 10 per cent in April from the year before as dry weather hit farms.

Shares of Fonterra on Thursday traded as much as 2.5 per cent lower to touch a record low, on track for their third consecutive session of losses.

REUTERS