You are here
Australia shares hit by decline in oil, Aussie dollar; NZ slightly up
[BENGALURU] Shares in Sydney skidded on Wednesday as a drop in oil prices dented energy-related stocks, while a weaker Australian dollar prompted some investors to trim their exposure to local assets.
The S&P/ASX 200 index was down 33.242 points, or 0.6 per cent, to 5,668.2 by 0043 GMT.
"Its a currency trade. We are in a situation where a lot of the institutional investors are away, and the Australian dollar has started to fall. The central bank yesterday tried to talk it down even further," said Mathan Somasundaram, a market portfolio strategist with Blue Ocean Equities.
The Australian dollar slipped to three-month lows on Tuesday after the country's central bank held rates steady as expected and cautioned that a higher currency would drag on the economy and inflation.
The Aussie has been under pressure as its US counterpart has been buoyed by expectations of another interest rate increase by the Federal Reserve by year-end.
"So in a falling currency environment, global guys will be reducing exposure, and that hits our large caps like the banks."
The 'Big 4' banks were the biggest drag on the index, down between 0.3 per cent and 1.4 per cent, while energy stocks were in the red with the index hitting its lowest in nearly two weeks, down 1.2 per cent.
Woodside Petroleum lost as much as 1.6 per cent, its steepest intraday loss in one month.
The selling was driven by falling oil prices following sizable third-quarter gains and on concerns that higher prices might spur increased US shale production.
Miners were also hit, with Rio Tinto and Fortescue Metals dropping over 1.2 per cent each.
Consumer stocks continued to be pressured by the backdrop of intensifying competition in the retail sector. Wesfarmers and Woolworths shed 0.4 per cent an 1.7 per cent respectively, with the latter slumping to its lowest since Jan 31.
New Zealand's benchmark S&P/NZX 50 index tacked on 0.1 per cent, or 7.3 points, to 7,942.7.
Gains in consumer stocks slightly offset losses in financial as a2 milk added 3.8 per cent, while Westpac Banking lost 0.4 per cent.
Building materials maker Fletcher Building was the biggest drag on the index, down 0.6 per cent.