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Australia: Shares drop on global slowdown worries; New Zealand dips

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Australian shares dropped on Friday as a weaker US dollar dented blue-chip healthcare firms that have offshore operations, while fears of a slide into recession continued to dog sentiment amid scepticism over the Brexit deal and Sino-US talks.

[BENGALURU] Australian shares dropped on Friday as a weaker US dollar dented blue-chip healthcare firms that have offshore operations, while fears of a slide into recession continued to dog sentiment amid scepticism over the Brexit deal and Sino-US talks.

Meanwhile, economic growth in China, Australia's biggest trade partner, slowed more than expected to 6.0 per cent year-on-year in the third quarter, the weakest pace in at least 27-1/2 years, as demand at home and abroad faltered amid a bruising Sino-US trade war.

Markets globally were cautiously watching out for progress on "phase one" trade deal between Washington and Beijing and if a Brexit deal would get its support in the British parliament.

The S&P/ASX 200 index was down 0.6 per cent, or 38.3 points, at 6,646.4, as of 0119 GMT.

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However, the index was poised for a weekly gain of 0.9 per cent.

"The Australian equity market will probably trade sideways today, with a bit of an eye out on the China data out this morning ... there will certainly be concerns about Brexit, trade issues and macroeconomic headwinds as well," said Damian Rooney, director of equity sales at Argonaut.

"The Aussie dollar going up is also taking a hit on the currency plays such as healthcare," said Mathan Somasundaram, market portfolio strategist at Blue Ocean Equities.

The US dollar fell sharply against the euro and sterling on Thursday as European Union leaders unanimously backed a long-awaited Brexit deal to take Britain out of Europe on Oct 31.

Heavyweight healthcare stocks such as CSL and Cochlear fell as much as 1.1 per cent and 0.8 per cent, respectively. These firms make a large chunk of their revenue from the United States.

Falling for a second straight session, the banking sector dropped 0.5 per cent to lead losses in Australia's main index. The "Big Four" banks shed between 0.7 per cent and 1.1 per cent.

Wealth manager IOOF Holdings marked its highest in a year, advancing as much as 6 per cent, after the sale price it had to pay for Australia and New Zealand Banking's pension assets was shaved off by 13 per cent on Thursday.

In further windfall for IOOF, the banking regulator on Friday stood down from appealing a Federal Court decision to dismiss its regulatory action against the wealth manager.

Oil and gas producers Woodside Petroleum and Santos both retreated up to 1.5 per cent, a day after strong results had propelled their shares.

The New Zealand benchmark declined 0.3 per cent, or 26.11 points, to 11,115.75. Specialist outdoor retailer Kathmandu Holdings was the top loser, dropping as much as 2.2 per cent.

REUTERS