Australian, NZ shares slide as trade tensions rattle investors

[BENGALURU] Australian shares finished another torrid session in the red on Thursday, posting its biggest loss in six months as investors sold off on concerns over emerging markets turmoil, global trade tensions and local banking sector woes.

The S&P/ASX 200 index slid 1.1 per cent, or 70 points, to 6,160.4 to over a two-month low and the worst one-day per centage decline since March.

"Concern is that we will see a further escalation in trade disputes and the impact that has on global trade and a number of trade markets has investors very cautious and in a risk-off mode," said Michael McCarthy, chief strategist at CMC Markets and Stockbroking.

Financials gave up 0.6 per cent, on the day both Australia and New Zealand Banking and Commonwealth Bank of Australia raised their mortgage rates due to higher funding costs.

The move follows Westpac Banking Corp's decision to raise its key mortgage rates late last month to preserve its profit margins, while number four lender National Australia Bank is widely expected to follow suit.

The financial sector has been dogged this year by revelations of widespread wrongdoing in a high profile Royal Commission inquiry, forcing the departures of several top executives and tarnishing the reputation of some of the nation's top banks and financial firms.

"The driver for these interest rate rises are external costs, all of the Big Four banks are in roughly the same position when it comes to it, it would be surprising if NAB didn't follow suit fairly soon," added Mr McCarthy.

Australia's so-called "Big Four" banks together control about 80 per cent of the country's deposit and home loan market. The country's central bank has held its official cash rate at a record low of 1.50 per cent since 2016.

Resource-related stocks were hit especially hard, as rising tensions and weaker commodity prices has seen investors flock to safer bets like the US dollar. This has made metals priced in the greenback costlier for non-US investors.

The material index dropped 1.3 per cent, with global mining giant BHP losing 2.5 per cent.

Elsewhere, Investa Office Fund rose 1.7 per cent after US private equity giant Blackstone Group said it will willing to hike its bid, topping an late offer by Canada's Oxford Properties Group.

New Zealand's benchmark S&P/NZX 50 index slid 1.4 per cent, or 126.4 points to finish the session at 9,101.6.

a2 Milk Company and Air New Zealand slumped 4.2 per cent and 3.8 per cent.

REUTERS