Commodities weakness weighs on Aust shares

Christian Edwards
(Australian Associated Press)

The Australian share market has closed lower after mining and energy companies slid due to a plateau in commodity prices and the major banks lost ground.

The benchmark S&P/ASX200 index closed down 28.2 points, or 0.49 per cent, at 5,744.2 points on Wednesday.

AxiTrader chief market strategist Greg McKenna said investors were seeking direction as commodities and energy companies sold off and the big four banks hit peak values.

“For the headline equities, traders are saying they’re fully priced in the run up to earnings season – commodities have come off, financials are fully priced – and the market is looking for any short-term catalyst,” Mr McKenna said.

The Aussie mining sector took the brunt of early anxieties, as doubts emerged over the momentum of iron ore prices following overnight plateaus.

The majors lost over two per cent with Fortescue Metals down 1.2 per cent to $5.75, BHP Billiton down 1.6 per cent to $25.75 and Rio Tinto was 0.2 per cent lower at $65.84.

Following the market close, Rio Tinto reported a net profit of $US3.3 billion for the first half of 2017 – nearly doubled on the back of stronger commodity prices.

After US crude moved back below $US50 over night, oil producers Woodside Petroleum and Santos retreated after days of gains.

The major banks all lost ground on Wednesday with ANZ, National Australia Bank, Westpac and the Commonwealth Bank all retracing the week’s earlier gains to be down between 0.4 per cent and one per cent.

Mr McKenna said pressure is building as reporting season begins with investors looking for gains.

“All the headline acts on the ASX 200 are up, or near, their higher marks for the range, that’s why earnings season really needs to be good to keep the market up because until then, its the ebb and flow of short-term events,” he said.

In company news, shares in Genworth Mortgage posted a half year drop in profit of more than one third due to adverse portfolio revaluations, higher delinquencies and a slip in premiums.

Shares in the lender’s mortgage insurance provider were up six per cent, or 18 cents to $3.20, however, as the company announced a $100 million share buyback.

Medical supplier Resmed was down 5.6 per cent at the close to $9.12 after the respiratory face mask and machine maker’s revenue improved but was slightly down on annual profit.

And after breaking through the 80 US cent mark overnight, despite the Reserve Bank of Australia governor’s observation on Tuesday that a rising dollar would hit economic growth, the Australian dollar has retreated to be trading at 79.66 US cents at 1630.

“The Aussie is off a little today, which should be good for the companies – like Qantas – with significant offshore exposure,” Mr McKenna said.

Qantas shares gained 19 cents to $5.58.


* The benchmark S&P/ASX200 was down 28.2 points, or 0.49 per cent, at 5,744.2 points.

* The broader All Ordinaries index was down 26.1 points, or 0.45 per cent, at 5,794.5 points.

* The September SPI200 futures contract was down 33 points, or 0.6 per cent, at 5,681 points.

* National turnover was 2.5 billion securities traded worth $5.3 billion.


One Australian dollar buys:

* 79.71 US cents, from 80.02 US cents on Tuesday

* 88.19 Japanese yen, from 88.21 yen

* 67.33 euro cents, from 67.68 euro cents

* 60.31 British pence, from 60.56 pence

* 107.12 NZ cents, from 106.76 NZ cents


The spot price of gold in Sydney at 1700 AEST was $US1,267.08 per fine ounce, down from $US1,268.12 per fine ounce on Tuesday.


* CGS 4.50 per cent April 2020, 1.8675pct, from 1.8768pct on Tuesday

* CGS 4.75pct April 2027, 2.6505pct, from 2.6595pct

Sydney Futures Exchange prices:

* September 2017 10-year bond futures contract at 97.295 (implying a yield of 2.705pct), from 97.285 (2.715pct) on Tuesday

* September 2017 3-year bond futures contract at 98.03 (1.97pct), unchanged

(*Bond market closes taken at 1630 AEST previous local session, currency levels taken at 1700 AEST previous local session)


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