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Anxious traders send market lower

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Published on: Wednesday, July 12, 2017

Rising iron ore prices couldn’t protect the Australian share market from the fallout from the latest political drama in the US, with all sectors shedding value as investor sentiment was hit by concerns about the future of the Trump administration’s economic agenda.

The benchmark S&P/ASX200 index fell one per cent to 5,673.8 points, as a handful of resources stocks providing the the only bright spot.

Citi director of equities sales Karen Jorritsma said any issues shading Donald Trump’s touted economic agenda usually weigh on global markets, and a strong previous session for insurers and financials meant it was a day of selling across the board.

“Whenever there’s a Trump issue, we often see a broad based softness and the market has been a bit directionless today,” she said.

Global markets have been jittery following the release of emails connecting Donald Trump Jr, the US President’s eldest son, to Russian support for his father’s 2016 election campaign, again raising concerns over the durability of the US administration.

Financial markets are also waiting for US Federal Reserve chair Janet Yellen’s semi-annual testimony at the House Financial Services Committee on Wednesday night, which may provide signals on US monetary policy tightening.

But the Australian dollar is stronger against a US dollar weakened by the Trump Jr emails, trading at 76.51 US cents at 1630 AEST, from 76.18 US cents on Tuesday.

With global oil prices resurgent and iron ore rising for a third straight day, the major energy and resources stocks defied the softer broader sentiment.

“Wobbly global markets have taken the steam out of financials and whenever there is a mention of Trump we see a flight to gold and the miners have also provided a bit of a flight to safety,” Ms Jorritsma said.

Newcrest Mining gained two per cent, BHP Billiton lifted 0.4 per cent and Fortescue Metals was 0.8 per cent higher.

Santos added 0.3 per cent, Oil Search gained 0.6 per cent, but Woodside Petroleum fell 0.6 per cent.

The big four banks were down between one per cent and 1.5 per cent, while Macquarie Group fell 1.3 per cent.

Vaccines and blood products developer CSL continues to fall after becoming the subject of a US patent infringement claim, dropping 2.5 per cent.

Homewares retailer Adairs enjoyed a 34 per cent jump to $1.275 on the back of strong sales in the final quarter of the financial year.

ON THE ASX:

* the benchmark S&P/ASX200 was down 55.1 points, or 0.96 per cent, at 5,673.8 points,

* The broader All Ordinaries index was down 50.8 points, or 0.88 per cent, at 5,717.7 points.

* The September SPI200 futures contract was down 56 points, or 0.99 per cent, at 5,619 points.

* National turnover was 2.2 billion securities traded worth $5.8 billion.

CURRENCY SNAPSHOT AT 1700 AEST:

CURRENCY ASK BID PREVIOUS

AUD/USD 0.7652 0.7644 0.7634

AUD/JPY 86.86 86.74 86.99

AUD/EUR 0.6679 0.667 0.6657

AUD/NZD 1.0576 1.0561 1.0566

AUD/GBP 0.597 0.5961 0.5941

GOLD:

The spot price of gold in Sydney at 1700 AEST was $US1,218.03 per fine ounce, up from $US1,211.12 per fine ounce on Tuesday.

BOND SNAPSHOT AT 1630 AEST:

* CGS 4.50 per cent April 2020, 1.93pct, from 1.9511pct on Tuesday

* CGS 4.75pct April 2027, 2.666pct, from 2.6945pct

Sydney Futures Exchange prices:

* September 2017 10-year bond futures contract at 97.28 (implying a yield of 2.72pct), from 97.25 (implying a yield of 2.75pct) on Tuesday

* September 2017 3-year bond futures contract at 97.97 (2.03pct), from 97.96 (2.04pct).

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


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