Australia stocks follow flat Wall Street; NZ extends gains
[SYDNEY] Australian shares edged down on Wednesday, taking their cue from Wall Street which closed flat following hawkish comments from US Federal Reserve Chair Janet Yellen.
The S&P/ASX 200 index fell 0.32 per cent, 18.183 points to 5,652.8 by 0241 GMT. The benchmark closed 0.22 per cent down on Tuesday.
The Fed needs to continue gradual rate hikes despite broad uncertainty about the path of inflation, Fed Chair Janet Yellen said on Tuesday in remarks that acknowledged the central bank's struggle to see the outlook for one of its key policy objectives.
"Yellen had an escape clause in her speech, she did speak about how if you're too gradual in increasing interest rates it could damage the economy. But she also said the Fed might have got a bit ahead of itself in working out when inflation was going to revise," said Tony Farnham, an economist at Patersons Securities.
"So I would argue that if she hadn't added that second rider, then the stock market of the US would have been quite a bit lower."
Australia's financial stocks fell as much as 0.4 per cent, with Commonwealth Bank of Australia dropping as much as 0.6 per cent to its lowest in more than two weeks. The other "Big Four" banks posted marginal gains.
"In terms of our financials, they are being driven by the ongoing debate about whether the housing loan market still has momentum, strength of the economy, and other domestic factors, in addition to what has happened to financial markets overseas," said Mr Farnham.
New Zealand's benchmark S&P/NZX 50 index rose 0.095 per cent, or 7.48 points to 7,894.66, shrugging off an inconclusive election result and coalition wrangling for now to reach a record high.
The index was on track for a fourth straight session of gains, with consumer staples and energy stocks outperforming other sectors.
Dairy processor Synlait Milk Ltd rose as much as 2.7 per cent to a record high and was among the top gainers on the index.
The country's central bank is expected to stand pat when it decides interest rates on Thursday.
"I don't think the central bank's interest rate is going to influence the market. The more immediate concern from New Zealand's angle is if they can get a government cobbled together," said Mr Farnham.
REUTERS
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