Australia: US tariffs, Italian election weigh on shares; NZ stocks higher

[BENGAURU] Australian shares edged lower on Monday, as proposed US tariffs on steel and aluminium weighed on materials stocks and the prospect of a hung parliament in Italy hit global investor appetite.

US stock futures slipped amid fears of a global trade war, which hit Asian stocks, while the euro was volatile after exit polls for Italy's elections pointed to a hung parliament.

The S&P/ASX 200 index slipped 0.4 per cent, or 23 points, to 5,905.9 by 0104 GMT. The benchmark closed down 0.7 per cent on Friday.

"It's a mixture of two factors - trade war fears and a possible hung parliament in Italy both add to the selling pressure in US futures," said Peter Spanos, volatility risk manager at CMC Markets.

A centre-right coalition is set to win the most seats in Italy's parliament ahead of the anti-establishment 5-Star Movement, according to the exit polls, although it was unlikely to produce an outright winner.

Material stocks slid as much as 1 per cent to a three-week low, with index heavyweights BHP Billiton Ltd and Rio Tinto Ltd falling 1.5 per cent and 1.1 per cent, respectively.

"I think Trump's proposed tariffs are still weighing on the (materials) sector and will do so for some time," said Spanos.

"It's clearly negative and recent talk from Mr Trump indicating that there will be no negotiations to all ally countries, is clearly impacting the materials sector."

President Trump announced on Thursday he would impose hefty tariffs on imported steel and aluminium to protect US producers, risking retaliation from major trade partners like China, Europe and neighbouring Canada.

The financial sector in Australia fell as much as 0.7 per cent to its lowest in more than a week, with the "Big Four" banks losing between 0.4 per cent and 0.9 per cent.

Commonwealth Bank of Australia lost as much as 1.1 per cent to over a one-week low.

The top loser on Australia's main index was Retail Food Group, slumping as much as 49.5 per cent to its lowest since December 2008 after the company posted a 31.8 per cent plunge in first-half profit on Friday.

Meanwhile, New Zealand's benchmark S&P/NZX 50 index climbed 0.4 per cent, or 28.98 points to 8,317.4, led by healthcare and industrial stocks.

The top gainer on the index was Fisher & Paykel Healthcare Corporation Ltd, rising as much as 2.7 per cent.

REUTERS