You are here

Australia shares slumps on failure of US healthcare bill; NZ up


[BENGALURU] Australian shares skidded on Monday after two sessions of gains as the region followed Wall Street's fall on news of the collapse of President Donald Trump's healthcare reform package.

Mr Trump suffered a stunning political setback on Friday when Republican leaders pulled legislation to overhaul the US healthcare system.

Investor sentiment was hit by the failure of Mr Trump's legislative debut which put in question his ability to get other key parts of his agenda, including tax cuts, through Congress, but also the Republican Party's ability to govern.

"I think the market is taking its cues from the currency market at the moment, we are seeing US dollar weakness against both euro and yen," said Michael McCarthy, chief market strategist at CMC Markets.

Market voices on:

"We may well see a much more severe reaction (to the failure to pass the healthcare legislation) in US share markets when they reopen tonight."

The S&P/ASX 200 index fell 0.5 per cent to 5,725.8 by 0030 GMT, tracking US equity index futures which fell to a six-week low on Sunday.

The Australian mining and basic materials indexes lost 1.6 per cent and 1.5 per cent respectively in early trade.

Chinese steel and iron ore futures fell for a fourth day on Friday, adding to a near week-long selloff that led to both commodities posting their biggest weekly drop in three months.

"Although commodities are overall mixed and in fact copper moved ahead and oil is higher, we did see pressure on iron ore prices on Friday night. That of course speaks directly to some of the major miners here," said Mr McCarthy.

Iron ore miner BHP Billiton fell 2.6 per cent while Mining giant South32 Ltd lost 2.4 per cent.

The end of a historic strike at Chile's Escondida copper mine, the world's biggest, has left its owner, BHP Billiton, nursing an estimated US$1 billion loss.

The financial index dropped 0.5 per cent, with the "Big Four" banks falling between 0.3 per cent - 0.5 per cent.

Bucking the trend, the gold index gained 1.6 per cent on higher gold prices.

New Zealand's benchmark S&P/NZX 50 index rose 0.2 per cent, or 11.98 points, to 7,085.81. The index was on track for its third consecutive session of gains, led by utilities and telecom stocks.

Electric utilities company Meridian Energy Ltd rose 1.1 per cent, while Spark New Zealand Ltd gained 0.9 per cent.

A2 Milk was the biggest gainer on the index, rising 2.5 per cent, to close at an all-time high.