Australian shares edged lower on Thursday, following Wall Street's fall overnight, after the U.S. Federal Reserve signalled it could begin cutting its large balance sheet earlier than expected.
Australian shares edged lower on Thursday, following Wall Street’s fall overnight, after the U.S. Federal Reserve signalled it could begin cutting its large balance sheet earlier than expected. The S&P/ASX 200 index slipped 0.6 percent, or 36.50 points at 5,839.70 by 0217 GMT. Minutes from the March Fed meeting showed most policymakers thought the U.S. central bank should take steps to begin trimming its $4.5 trillion balance sheet later this year. Banks had expected no changes until mid-2018.
“The big turnaround we saw in the United States is bleeding through into our market,” Christopher Conway, head of research and trading at Australian Stock Report. Aussie financial stocks lost 1.3 percent tracking their U.S. peers, with the “Big Four” losing between 1-1.6 percent.
Australia’s banking watchdog said on Wednesday that authorities can and will take further action if needed to stop a debt-fuelled bubble in the country’s red-hot housing market. “Bank stocks may be key to the ASX 200 today, as investors assess the possibility of banks being required to increase capital to support housing loans,” said Ric Spooner Chief Market analyst at CMC Markets.
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Investors were also wary ahead of a potentially tense meeting later on Thursday between U.S. President Donald Trump and his Chinese counterpart Xi Jinping. Topping the agenda will be whether Trump makes good on his threat to use U.S.-China trade ties to pressure Beijing to do more to rein in its nuclear-armed neighbour North Korea.
Energy stocks also lost ground due to a fall in oil prices, as record U.S. crude inventories underscored that markets remain bloated by high production and brimming storage. Shares in BHP Billiton Ltd fell 0.7 percent after it said it won’t meet its export commitments from the cyclone-struck northeast Australia. Gold stocks gained due to “a shift in risk sentiment,” Conway said. The gold index rose nearly 2 percent to its highest in over five weeks. Newcrest Mining Ltd rose 0.6 percent.
New Zealand’s benchmark S&P/NZX 50 index rose 0.1 percent to 7,275.34 points by 0217 GMT. The benchmark hit an intraday high of 7,281.74, the highest since October 2016. Energy and consumer stocks accounted for most of the gains. Z Energy Ltd rose 2.5 percent, while a2 Milk Company Ltd gained 1.6 percent.
(Reporting by Krishna V Kurup in Bengaluru; Additional reporting by Sandhya Sampath; Editing by Randy Fabi)