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Australian shares drop as miners retreat; NZ inches lower

Published 17/06/2019, 12:23 pm
© Reuters.  Australian shares drop as miners retreat; NZ inches lower
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* Trading thin ahead of FOMC meeting

* Mining subindex comes off near 8-year high

* Vocus biggest loser on ASX 200 after AGL withdraws offer

By Ambar Warrick

June 17 (Reuters) - Australian shares ticked lower on Monday as blue-chip mining stocks took a breather after rallying more than 6% last week, while energy firms were pressured by uncertainty over the demand outlook for oil.

The S&P/ASX 200 index .AXJO fell 13.80 points or 0.2% to 6,540.20 by 0144 GMT. The benchmark rose about 0.2% on Friday.

Early trading in the region was subdued as investors awaited a two-day U.S. Federal Reserve meeting starting on Tuesday.

Weak U.S. economic data and concerns over escalating Sino-U.S. trade frictions have dramatically raised the chance of a Fed rate cut in coming months, though the already-slim risk of an easing this week was further reduced following Friday's strong U.S. sales data.

Metals and mining stocks .AXMM , which rallied to near 8-year highs on Friday on supply concerns, pulled back in early trade. Global miners BHP Group Ltd BHP.AX , the largest capitalised stock, came off a more than 8-year high to trade 1.3% lower, while Rio Tinto (LON:RIO) declined 2.2%.

Energy stocks .AXEJ dipped 0.8%, although uncertainty over oil prices amid slowing demand sidelined most investors. Attacks on two oil tankers in the Middle East last week had driven up prices and raised tensions in the region after the United States blamed Iran for the assault.

Woodside Petroleum WPL.AX , the country's largest listed oil and gas explorer, dropped about 0.3%.

Vocus Group Ltd VOC.AX , the country's fourth-largest internet provider, plummeted nearly 33% after AGL Energy AGL.AX dropped its $2.1 billion offer for the company. Vocus was the largest loser on the ASX 200, while AGL rose about 2.6%. marked the second time AGL has backed out of a bid for the telco this year, and the fifth time a suitor dropped Vocus over the last two years.

Australian financials .AXFJ advanced about 0.4%, with three of the big four banks rising between 0.5% and 0.7%.

Wealth manager stocks extended a sell-off on concerns of increased regulatory scrutiny towards the sector after the Australian banking watchdog slapped stricter conditions on AMP Ltd's AMP.AX pension funds. guidance from fund manager Challenger Ltd CGF.AX last week had also prompted selling in the sector. AMP and Challenger fell about 1% for the day.

New Zealand stocks edged lower, with defensive local utility firms pulling back.

The benchmark S&P/NZX 50 index .NZ50 fell 0.1% or 11.68 points to 10,223.69.

Electricity retailers Meridian Energy MEL.NZ and Contact Energy CEN.NZ dropped about 1.1% and 0.3%, respectively. Meridian had recently touched a record high, while Contact hit a near 1-year peak as both firms benefited from safe-haven buying in the wake of growing international trade frictions and growth worries.

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