Australia: Shares lose steam as real estate weighs; NZ drops

[BENGALURU] Australian shares gave up early gains to post their biggest intraday drop in over a week on Wednesday, dragged by losses in real estate and materials stocks.

The S&P/ASX 200 index declined 22.8 points, or 0.4 per cent, to 6,113 by 0117 GMT, after rising as much as 0.2 per cent to breach the 6,150 level - its highest in 10 years earlier in the session. The benchmark closed up 0.1 perc ent on Tuesday, its fifth straight day of gains.

Property stocks weighed the most on the index, with Goodman Group and GPT Group slipping as much as 2.5 per cent and 2.8 per cent, respectively.

Goodman Group fell to its lowest since October 2017.

"Real estate tends to have a negative correlation to higher bond yields, on concerns of the possibility of higher interest rates," said Ric Spooner, Chief market strategist at CMC Markets.

Benchmark US Treasury yields hit a 10-month high on Tuesday after the Bank of Japan tweaked its bond-buying programme.

"Real estate stocks have also been a yield play in Australia, with people looking to buy into real estate investment trusts as a way of earning yields."

"As US bond yields start to rise, there would be some valuation pressure on the REITs," said Mr Spooner.

Miners also slipped into the red though heavyweights such as Rio Tinto continued to enjoy gains at near six-and-a-half year highs.

South32 Ltd shed 1.6 per cent, while BlueScope Steel Ltd slumped 3.2 per cent in its biggest fall in eight weeks.

"Materials and energy stocks have been on a tear recently, and I think they're taking a pause for breath," said Chris Weston, chief market strategist at IG Markets.

Gold miner Newcrest Mining Ltd fell 2.8 per cent to a two-week low after prices edged lower, weighed down by a stronger US dollar on the back of concerns about political uncertainty in Europe.

New Zealand's benchmark S&P/NZX 50 index fell as much as 0.6 per cent, its biggest drop in nearly nine weeks, as healthcare stocks sold off.

Fisher & Paykel Healthcare Corporation Ltd lost 2.8 per cent to wallow at four-week lows, while Ryman Healthcare Ltd marked its biggest percentage drop in five weeks.

Dairy company a2 Milk Company Ltd also pinned the index down, falling as much as 1.9 per cent to a one-week low.

REUTERS