Australia: Shares drop as ties with China come under pressure

[BENGALURU] Australian shares fell on Wednesday, weighed down by escalating tensions with its top trading partner China over a global probe into the origin of the novel coronavirus, while Wall Street's overnight losses also dented sentiment.

The S&P/ASX 200 index lost 0.6 per cent to 5,526.7 by 0054 GMT. It had closed at a two-month peak on Tuesday.

Australia and China engaged in a war of words after Beijing imposed heavy tariffs on Australian barley imports - a move expected to effectively halt a trade worth billions of dollars.

Australia, along with the European Union, has spearheaded the call for an inquiry into the origins of the new coronavirus, which first appeared in China.

Overnight, US indexes were dragged lower by a report questioning the validity of Moderna Inc's early trial results for a possible coronavirus vaccine.

Back home, global miners BHP Group and Rio Tinto led declines in the heavyweight mining sector which fell as much as 1.5 per cent.

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Among financials, lenders Commonwealth Bank of Australia and National Australia Bank led declines. The sub-index shed 1.3 per cent.

Energy stocks also slid up to 2.2 per cent, with Woodside Petroleum and Santos easing 2.3 per cent and 2.6 per cent, respectively.

Top gold miner Newcrest Mining was the biggest drag among gold stocks despite reporting it had sufficient water supply at its Cadia mine for at least two years.

Australian shares of medical equipment firm Resmed dropped 2.7 per cent and were the biggest drag on a sub-index of healthcare stocks.

In New Zealand, the benchmark S&P/NZX 50 index eased 0.6 per cent to 10,728.55.

Deputy Governor of the central bank Geoff Bascand said in an interview with Reuters the government's bond buying programme could be expanded further if needed.

Fletcher Building, the country's largest construction firm, recouped early losses to rise 0.3 per cent after signalling a sharp downturn in 2021 due to the virus and laying off about 10 per cent of its workforce.

REUTERS