Australian shares have closed lower after increased political uncertainty in the US sparked a sharp sell-off on Wall Street and soured global risk appetite.
The benchmark S&P/ASX200 index closed down 0.56 per cent at 5,747.1 after Wall Street sold off heavily overnight with the S&P 500 recording its biggest daily percentage drop in three months.
CMC Markets chief market analyst Ric Spooner said Wall Street fell as concerns grew about whether US President Donald Trump will get on with his economic agenda.
“There is mounting concern that the US could face three years of political stagnation because nothing much has been achieved and the government seems to be divided,” Mr Spooner said.
Mr Spooner said reports that Mr Trump’s economic adviser, Gary Cohn, was considering resigning had added to uncertainty.
“He is a market favourite – a former Goldman Sachs investment banker who is seen as someone who knows what he’s doing,” Mr Spooner said.
The US president is already reeling from an exodus of company chief executives his key business advisory committees over his response to neo-Nazi and white supremacist marches, and the death of an anti-racism protester, in Virginia.
Mr Trump disbanded the committees as news of the exodus spread.
Mr Spooner said the negative sentiment from the US weighed on local shares, in particular the heavily-weighted financials sector which tend to be the most susceptible to global risk-off moves.
Terrorist attacks in Barcelona, Spain, which claimed at least 13 lives, also weighed on sentiment.
Locally, Westpac fell 1.6 per cent to $32.21, National Australia Bank was off 1.3 per cent to $30.87, ANZ dropped 1.2 per cent to $30.01 and the Commonwealth Bank shed 0.6 per cent to $79.09.
Macquarie Group dropped 1.5 per cent, to $87.39 and insurer QBE continued its recent sell-off to fall 3.6 per cent to $10.77 after announcing earlier this week that it will sell its troubled Latin American business.
Mining shares were also sharply weaker, led by BHP Billiton which fell two per cent to $25.39, while Rio Tinto shed 0.7 per cent to $63.19.
Kogan.com’s shares soared 8.8 per cent to $2.61 after the online consumer goods retailer said its net profit had more than quadrupled to $3.7 million.
Primary Health Care shares rose 2.8 per cent to $3.63, after declaring a full-year loss of $517 million, following a writedown in the value of its medical centres business.
Meanwhile, the Australian dollar is lower against its US counterpart, which strengthened on the back of European Central Bank minutes showing that policymakers worried about a possible overshoot in the euro.
At 1700 AEST on Friday, the Australian dollar was worth 78.96 US cents, down from 79.47 US cents on Thursday.
ON THE ASX:
* At the close, the benchmark S&P/ASX200 was down 32.1 points, or 0.56 per cent, at 5,747.1 points.
* The broader All Ordinaries index was down 28.7 points, or 0.49 per cent, at 5,798.5 points.
* The September SPI200 futures contract was down 42 points, or 0.73 per cent, at 5,704 points.
* National turnover was 2.8 billion securities traded worth $6.4 billion.
CURRENCY SNAPSHOT AT 1700 AEST:
One Australian dollar buys:
* 78.96 US cents, from 79.47 on Thursday
* 86.1725 Japanese yen, from 87.39 yen
* 67.29 euro cents, from 67.55 euro cents
* 61.25 British pence, from 61.65 pence
* 108.20 NZ cents, from 108.57 cents
The spot price of gold in Sydney at 1700 AEST was $US1,288.76 per fine ounce, from $US1,2287.78 per fine ounce on Thursday.
BOND SNAPSHOT AT 1630 AEST:
* CGS 4.50 per cent April 2020, 1.868pct, from 1.8824pct
* CGS 4.75pct April 2027, 2.566pct, from 2.5914pct
Sydney Futures Exchange prices:
* August 2017 10-year bond futures contract at 97.385 (implying a yield of 2.615pct), from 97.360 (2.640pct) on Thursday
* August 2017 3-year bond futures contract at 98.05 (1.95pct), from 98.03 (1.97pct).
(*Bond market closes taken at 1630 AEST previous local session. Currency closes taken at 1700 AEST previous local session.)