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$30bn wiped off as Aust stocks end FY17

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Published on: Friday, June 30, 2017

The Australian share market has fallen sharply, shedding more than $30 billion in value amid profit taking and a weak overseas lead on the last day of the financial year.

The benchmark S&P/ASX200 stock index dropped 1.7 per cent at 5,721.5 points, with all sectors in the red as the market suffered its biggest one-day fall since Donald Trump’s election as US president shook world markets in November.

CMC Markets chief market analyst Ric Spooner said investors had ignored encouraging manufacturing data from China, and had engaged in heavy selling as they pondered the possibility of a global rise in interest rates.

“International markets are having a rethink of their view of interest rates,” Mr Spooner said.

Investors had long believed that interest rates in the US would go up but markets were now thinking that there may be a more general increase in interest rates globally.

“They’re just thinking that the ECB (European Central Bank) and potentially the Bank of Japan and others may start operating earlier than they had envisaged,” Mr Spooner said.

The changed expectations on interest rates drove up bond yields, while gold also dropped sharply as investors shifted to cash.

Mr Spooner said the Australian dollar also got a lift from the belief that global interest rates, including rates in Australia, may rise faster than previously thought relative to US rate increases.

The Aussie dollar was trading at a three-month high against the greenback on Friday afternoon, also helped by stronger prices for commodities in China, including iron ore.

The Aussie passed the mark of 77 US cents in morning trade but had eased to 76.9 US cents at 1630 AEST – though still up from 76.64 US cents on Thursday.

On the share market, most of the heavyweight mining and energy shares fell sharply despite an overnight lift in the iron ore price and small gains in oil prices.

Global miner BHP Billiton fell 0.8 per cent to $23.28, Rio Tinto backtracked 0.2 per cent to $63.27, but Fortescue Metals added 0.2 per cent to $5.22.

South32 fell 2.9 per cent to $2.68, as the diversified miner said it had again suspended operations at its troubled Appin metallurgical coal mine in NSW over concerns of a build-up of methane gas levels.

Woodside Petroleum fell 2.1 per cent to $29.87, Oil Search lost 1.2 per cent to $6.82, and Santos dropped 2.6 per cent to $3.03.

In the banking sector, ANZ was off 1.0 per cent at $28.72, Westpac retreated 1.5 per cent to $30.51, Commonwealth Bank eased 1.4 per cent to $82.81, and National Australia Bank descended 1.1 per cent to $29.59.

TPG Telecom dropped 1.5 per cent to $5.70 as an analyst report expressed concern about future costs the telecommunications giant may face after an initial spend of $600 million on its mobile network rollout.

ON THE ASX:

* The benchmark S&P/ASX200 finished down 96.6 points, or 1.7 per cent, at 5,721.5 points.

* The broader All Ordinaries index was down 91.9 points, or 1.6 per cent, at 5,764.0 points.

* The September SPI200 futures contract was down 129 points, or 2.23 per cent, at 5,648 points.

* National turnover was 2.9 billion securities traded worth $8.9 billion.

CURRENCY SNAPSHOT AT 1700 AEST:

CURRENCY ASK BID PREVIOUS

AUD/USD 0.7681 0.7678 0.7682

AUD/JPY 86.06 86.01 86.16

AUD/EUR 0.6724 0.672 0.6714

AUD/NZD 1.05 1.0492 1.0516

AUD/GBP 0.5906 0.5903 0.5904

GOLD:

The spot price of gold in Sydney at 1700 AEST was $US1,243.29 per fine ounce, down from $US1,250.87 per fine ounce.

BOND SNAPSHOT AT 1630 AEST:

* CGS 4.50 per cent April 2020, 1.906pct, from 1.8542pct

* CGS 4.75pct April 2027, 2.5981pct, from 2.5041pct

Sydney Futures Exchange prices:

* September 2017 10-year bond futures contract at 97.335 (implying a yield of 2.665pct), from 97.445 (2.555pct) on Thursday

* September 2017 3-year bond futures contract at 98.01 (1.99pct), from 98.08 (1.92pct)

(*Bond market closes taken at 1630 AEST previous local session)


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