Australian shares closed lower as the Congressional deal to resolve US debt issues failed to allay investor concerns about the faltering American economy.
At 1615 AEST on Tuesday, the benchmark S&P/ASX200 index was down 64.2 points, or 1.43 per cent, at 4433.6, while the broader All Ordinaries index was down 62.8 points, or 1.37 per cent, at 4510.3.
On the ASX 24, the September share price index futures contract was 76 points lower at 4394 points, with 33,538 contracts traded.
After frantic round-the-clock talks, lawmakers in the US House of Representatives agreed early on Tuesday AEST to a deal to raise the limit on US sovereign debt, green-lighting at least $US2.1 trillion ($A1.92 trillion) in spending cuts over the next decade.
IG Markets research analyst Ben Potter said the passage of the legislation through the House of Representatives failed to ease market concerns about the US economy.
“Pretty much all of the good work that happened yesterday was undone,” Mr Potter said.
“This deal they’re signing at the moment is really going to cut back spending, which is going to weigh on the economy.
“Markets also did not like the economic news overnight at all,” he said.
The US manufacturing sector was flat in July, according to the Institute of Supply Management’s indexed survey of purchasing managers, released overnight.
Mr Potter said the widely expected decision by the Reserve Bank of Australia to keep interest rates on hold was welcomed by the market.
The RBA left the cash rate steady at 4.75 per cent at its regular monthly board meeting on Tuesday.
“It was a bit of a sigh of relief,” he said.
Locally, the major banks had a rough day, with National Australia Bank down 52 cents, or 2.12 per cent, at $23.97, Westpac was down 44 cents, or 2.11 per cent, at $20.37, ANZ lost 47 cents, or 2.21 per cent, to $20.82 and Commonwealth was 67 cents lower at $49.42.
Among health care stocks, CSL was down $1.01 at $30.22, and Fisher and Paykel Healthcare had shed seven cents to $2.00.
Resource stocks were down also. BHP Billiton fell 73 cents, or 1.73 per cent, to $41.57, and Rio Tinto lost $1.47, or 1.8 per cent, to $80.05.
Aquarius Platinum was the worst performing stock in the top 100, closing down 22 cents, or 5.03 per cent, at $4.15.
The price of gold in Sydney closed at $US1624.96 per fine ounce, up $US11.02 from $US1613.94 at close on Monday.
Gold miner Newcrest finished up 43 cents, or 1.09 per cent, at $40.03.
Some property stocks withstood the sell-off, with Westfield Retail Trust was up three cents at $2.49 and Stockland up two cents at $3.06.
Kathmandu finished higher after it forecast better than expected earnings. Its shares were up 11 cents, or 6.29 per cent, at $1.86.
National turnover at 1615 AEST was 1.91 billion shares, worth $4.76 billion, with 352 shares up, 706 down, and 356 steady.
