Australia: Shares drop on US recession fears, New Zealand also falls

[BENGALURU] Australian shares neared a four-week low on Monday as investors fled risk-sensitive assets on worries about a looming US recession, but gold stocks gained on safe-haven buying.

Broad-based losses pushed the benchmark S&P/ASX 200 index down 1.2 per cent, or 71.7 points, to 6,123.5 by 0034 GMT. The benchmark firmed 0.5 per cent on Friday.

US Treasury 10-year note yields dropped below three-month Treasury bill yields for the first time since 2007 on Friday after disappointing US manufacturing data, prompting a sell-off on Wall Street as a yield curve inversion is seen as a leading recession indicator.

Jeffrey Halley, Senior Market Analyst at Oanda, said the gloomy US data confirmed that "the global economy is slowing down after a 10-year quantitative-easing-induced bull run."

However, he added that "until the US-China trade talks conclude for better or worse, it is too soon to predict how deep the coming slowdown will be or even when it will occur".

Financials and materials stocks, which collectively account for nearly 60 per cent of the benchmark, led declines on Monday.

Top lender Commonwealth Bank of Australia slid 1.5 per cent to its lowest level since Feb. 15.

Westpac Banking Corp fell as much as 1.8 percent to a more than five-week low after flagging a A$260 million drop in first-half cash earnings due to provisions for customer refunds in the wake of an inquiry into financial sector wrongdoing.

Mining stocks, which were also reeling from lower copper prices, were down 1.3 per cent at a one-week low.

BHP Group and Rio Tinto fell 1.8 per cent and 1.9 per cent, respectively.

Rio on Sunday said it was suspending rail operations in the Pilbara region and mining at the Robe Valley operations in Western Australia as a severe tropical cyclone hit the state's far north.

Healthcare stocks also declined, with benchmark heavyweight CSL slipping 0.6 per cent.

The heightened fears of a global economic downturn fuelled safe-haven buying, pushing gold miners 1.9 per cent higher.

St Barbara was the benchmark's top performer, rising 3 per cent. Newcrest Mining climbed 2.6 per cent to its highest level since July 2016.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index fell 0.5 per cent or 49.24 points to 9,501.75. The index closed at a record high on Friday.

Dairy firm a2 Milk Company slipped 1.2 per cent, while Meridian Energy fell 1.6 per cent.

Elsewhere, shares of Air New Zealand rose 1.9 per cent after the airline reported a rise in February passenger load factor and passengers carried.

REUTERS