Australia shares slip on faded hopes for big Fed rate cut; NZ rises

[BENGALURU] Australian shares declined marginally on Monday, pulled down by financial and healthcare stocks, as investors anticipated a smaller-than-expected interest rate cut by the US Federal Reserve.

The S&P/ASX 200 index closed down 0.14 per cent at 6,691.20. It had gained 0.8 per cent on Friday.

Optimism that there would be an aggressive rate reduction by the US central bank faded on Friday after the New York Fed walked back from earlier dovish comments.

Expectations of a 50 basis point trim at the July 30-31 Fed meeting were also scaled back as the Wall Street Journal reported the central bank was ready for a quarter-basis point cut, not a bigger one.

"Markets will likely trade with a more risk cynical bent this week as the less dovish Fed narrative continues to sink in," Stephen Innes, managing partner at Vanguard Markets, said in a note.

"Investors remain wholly captivated by the looser the policy, the better the risk opportunities."

Financials fell slightly with biggest lenders Commonwealth Bank of Australia and Westpac Banking Corp retreating 0.3 per cent and 0.1 per cent, respectively.

Export-reliant health stocks ended down 1.2 per cent as drug maker CSL Ltd lost 1.3 per cent and medical devices developer Cochlear Ltd declined 1.2 per cent.

The real estate sector was also down, as Goodman Group fell 1.5 per cent and Dexus receded 2.5 per cent.

Monday's higher oil prices - rooted in concern that Iran's seizure of a British tanker may lead to supply disruptions - gave energy stocks a boost.

Beach Energy added 5.3 per cent and Oil Search advanced 1.7 per cent.

Mining stocks climbed on hopes of more stimulative policies in China, the biggest buyer of Australia's raw materials.

China's central bank is likely to introduce more fiscal spending and liquidity infusions in the coming months to shore up its slowing economy, but sees more aggressive action like interest rate cuts as a last resort, Reuters sources said.

Global miners BHP Group and Rio Tinto advanced 0.7 per cent and 0.8 per cent, respectively.

New Zealand's benchmark S&P/NZX 50 index closed up 0.67 per cent, or 71.54 points, to 10,824.69.

Utilities firm Meridian Energy gained 1 per cent and dairy products maker a2 Milk Company rose 1.7 per cent to a record closing high.

REUTERS