Australia: Shares fall on worries over US repo market

[BENGALURU] Australian shares fell on Monday, tracking a feeble finish on Wall Street last week, as investors were worried about the year-end pressure on repo market in the United States.

The S&P/ASX 200 index dropped 0.6 per cent to 6,783.70 by 0139 GMT. The benchmark had gained 0.4 per cent on Friday.

"There is a general concern to see how well everything squares off at the year's end in the United States and that particularly points to the repo market," said Brad Smoling, managing director at Smoling Stockbroking.

The US Federal Reserve, earlier in the month, injected additional liquidity of US$500 billion, as demand for funds to settle Treasury purchases and pay corporate taxes outweighed loans available.

The shortage had put pressure on US repo rates in September when interest rates in US money markets shot up to as high as 10 per cent for some overnight loans, more than four times the Fed's rate.

"If there is not enough liquidity available from the Fed for the end of the year for corporations and banks to balance books, that could cause a problem," Mr Smoling added.

On Friday, the Nasdaq ended 0.2 per cent lower, snapping a 11-day winning streak, while the S&P 500 closed flat.

In Australian markets, the mining sector was the top loser, slipping almost 1 per cent to record its worst session since Dec 23.

Index heavyweight BHP Group shed about one per cent, while peer Rio Tinto fell as much as 1.4 per cent to its lowest in two weeks.

The financial sub-index fell as much as 0.9 per cent to its lowest since Dec 13 and worst session in almost three weeks. All of its components, including the "big four" banks, dropped.

Despite oil prices hitting three-month highs on Friday, the energy space weakened as much as 0.8 per cent to an over two-week low.

Woodside Petroleum and Santos tumbled 1.1 per cent each, to their lowest since Dec 13 and Dec 16, respectively.

Only gold stocks rose, up about 0.5 per cent, as bullion prices gained.

New Zealand's benchmark S&P/NZX 50 index slipped 0.1 per cent to 11,589.36.

Energy retailer Meridian Energy fell as much as 2.4 per cent to a week's low, while Mercury NZ lost 2.3 per cent. Both were top losers on the benchmark.

Retirement village operator Metlifecare rose as much as 7.1 per cent to its highest since November 2007 after it entered a deal with Asia Pacific Village Group, an entity of Swedish buyout firm EQT AB.

REUTERS