Australian, NZ shares retreat on profit taking, weak US lead

[BENGALURU] Australian shares traded lower on Tuesday as investors locked in profits after a series of strong gains, while a weak lead-in from US equities also dampened appetite.

The S&P/ASX 200 index fell 0.6 per cent or 35.6 points to 6,181.7 by 0025 GMT. The benchmark rose 0.4 per cent on Monday.

"Last week there was more optimism between China and the US, and Australia - being a proxy for the Chinese market - we obviously went up on that," said Caleb Weng, Research Analyst with the Australian Stock Report.

"And now, because it was trading on rumours, there's going to be some profit taking after the bull run."

Risk appetite was further hurt after China, the country's biggest trading partner, cut its growth target for this year to 6.0 to 6.5 per cent, in line with expectations, from around 6.5 per cent last year.

Mining stocks were the biggest weights on the benchmark, with the subindex losing about 1 per cent. Mining stocks are heavily exposed to Chinese markets and have gained about 14 per cent this year on optimism about an end to the trade tiff with the United States.

BHP Group and Rio Tinto, the largest mining stocks on the ASX 200, shed about 1.2 per cent and 0.7 per cent respectively.

Industrial stocks also declined, with mining contractor CIMIC Group shedding more than 2 per cent. A number of industrial stocks provide mining and logistic services to Australian miners, which ties their share prices together.

Financial stocks also retreated slightly, having gained for the past four sessions. The financial subindex shed about 0.5 per cent, having touched a more than five-month high on Monday.

Insurance Australia Group and Suncorp Group fell 0.3 per cent and 0.9 per cent, respectively, while the country's big four banks trended slightly lower.

Grocery chain Coles Group fell as much as 1.6 per cent after it said it would sign over its hotel business to private equity player KKR at a loss. Consumer conglomerate Wesfarmers, which holds a roughly 15 per cent stake in Coles, dipped 0.9 per cent.

Investors also awaited the outcome of the Reserve Bank of Australia's policy meeting later in the day, although most participants expect the bank to stand pat on its record-low rates.

"We will look at the RBA's comments on the housing market and wage growth, because that will give us an indicator of the next rate cut," Weng said.

Meanwhile, New Zealand stocks retreated after hitting a record high on Monday, with most sectors in the red. The benchmark S&P/NZX 50 index fell 0.2 per cent or 15.58 points to 9,397.91.

The New Zealand shares of Westpac Banking Corp dropped nearly 0.4 per cent, while telecommunications provider Spark New Zealand shed 0.5 per cent.

Bucking the trend, milk producer Fonterra rose about 0.9 per cent after it appointed Miles Hurell as permanent chief executive of the co-operative.

Reuters