The share market has ended the session sharply lower after a spike in the Australian dollar hit export-oriented companies, while the financial sector led broad-based losses.
The benchmark S&P/ASX200 dropped 1.2 per cent to 5,687.4 points with the major banks, materials and energy stocks all dragging the index lower.
The Australian dollar nudged 79 US cents for the first time since May 2015, after the minutes of an upbeat Reserve Bank of Australia’s July policy meeting sparked a lunchtime surge in the local currency.
At 1700 AEST, the Australian dollar was back up through the two-year threshold, worth 79.17 US cents, up from 78.10 US cents on Monday.
Macquarie Wealth Management division director Martin Lakos said the market was surprisingly low on the back of the rising dollar and the more hawkish tone of the RBA minutes.
“Broadly speaking the currency has not been great for exporters or interest rate-sensitive stocks and it’s not behaving the way the RBA would like to see it,” Mr Lakos said.
BHP Billiton was down 0.3 per cent to $25.10, while Fortescue was down one cent to $5.36.
Rio Tinto was down 1.5 per cent to $64.94 after lowering expectations for full-year shipments of iron ore.
Despite the major Australian banks ending the day between 1.6 per cent and 1.9 per cent lower, Mr Lakos said he was not uncomfortable with the outlook for the big four, despite recent headwinds, including new capital requirement rules, expected to be handed down this week.
“There are a lot of headwinds for the big four Australian banks but to put in some context, all of them are still in the top eight banks in the world in regards to balance sheets, so they’re in good company,” he said.
Commonwealth Bank led the day’s losses, down 1.9 per cent to $81.40.
In other company news, Oil Search was down 0.7 per cent to $6.73 after a four per cent quarter-on-quarter drop in production.
Woodside Petroleum shed 2.3 per cent to $29.57.
Shares in rural exporter Wellard were down more than 25 per cent, at 14.5 cents – an all time low – after Australia’s biggest cattle exporter said Asian demand was being stifled by high prices.
Shareholders in CIMIC were presented with a 25 per cent increase in dividends after the construction and contract mining giant confirmed its guidance for a full-year net profit of $640 million to $700 million, up on last year’s $580 million.
CIMIC closed up 1.1 per cent or 43 cents to $38.80.
Village Roadshow was also up 1.75 per cent to $4.07 – following a mid-session plunge to $3.68 – after warning full-year earnings from its theme parks division would come in at the lower end of guidance.
Village said it will record a $65 million pre-tax impairment against its Wet’n’Wild water park in Sydney.
ON THE ASX:
* The benchmark S&P/ASX200 index was down 68.1 points, or 1.18 per cent, at 5,678.4 points
* The broader All Ordinaries index was down 62.7 points, or 1.08 per cent, at 5,738.1 points.
* The SPI200 futures contract was down 68 points, or 1.19 per cent, at 5,629 points.
* National turnover was 2.3 billion securities traded worth $6 billion.
CURRENCY SNAPSHOT AT 1700 AEST
CURRENCY ASK BID PREVIOUS
AUD/USD 0.7919 0.7915 0.7798
AUD/JPY 88.84 88.75 87.82
AUD/EUR 0.6871 0.6866 0.6793
AUD/NZD 1.076 1.0753 1.0649
AUD/GBP 0.6047 0.6042 0.5973
GOLD:
The spot price of gold in Sydney at 1700 AEST was $US1,237.30 per fine ounce, up from $US1,229.98 per fine ounce on Monday.
BOND SNAPSHOT AT 1630 AEST:
* CGS 4.50 per cent April 2020, 1.9671pct, from 1.916pct
* CGS 4.75pct April 2027, 2.6923pct, from 2.6756pct
Sydney Futures Exchange prices:
* September 2017 10-year bond futures contract at 97.255 (implying a yield of 2.745pct), from 97.27 (2.73pct) on Monday
* September 2017 3-year bond futures contract at 97.94 (2.06pct) from 98 (2pct)
(*Bond market closes taken at 1630 AEST previous local session)
