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Australian shares slip as financials, healthcare sap gains in materials; NZ up

Published 25/07/2018, 12:32 pm
© Reuters.  Australian shares slip as financials, healthcare sap gains in materials; NZ up
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* Rise in commodity prices supports materials

* June quarter headline inflation misses expectations

* Strengthening Aussie dollar piles pressure on healthcare stocks

By Nikhil Nainan

July 25 (Reuters) - Australian shares fell in light trade on Wednesday as a stronger Aussie dollar and mild price pressure weighed on healthcare and financial stocks, offsetting strong gains in materials.

The S&P/ASX 200 index .AXJO dropped 14.3 points to 6,251.5 by 0200 GMT. The benchmark rose 0.6 percent on Tuesday.

Financials were the biggest drag, as consumer prices data issued by the Australian Bureau of Statistics was underwhelming, quelling any expectations of an imminent central bank rate hike.

The consumer price index rose 0.4 percent over the June quarter, slightly lower than expected. inflation exceeding expectations would speak "directly to the future interest rate environment, and that directly affects financials," said Michael McCarthy, chief strategist at CMC Markets and Stockbroking.

The main financial index .AXFJ dropped 0.5 percent, with Westpac Banking WBC.AX leading the losses among the 'Big Four' banks.

Healthcare stocks, which are highly dependent on exports, succumbed to strong gains in the Aussie dollar on Tuesday which continued to strengthen in early trade, tracking Beijing's vow to pursue a more 'vigorous' fiscal policy.

The Aussie, which if often used as liquid proxy for China plays, also benefited as prices of commodities such as industrial metals rose. MKTS/GLOB

The healthcare sector index .AXHJ lost 1.6 percent, with index heavyweight CSL CSL.AX down nearly 2 percent.

"CSL is seen as an earner of international revenues and when the Aussie dollar rallies, the stock often comes under pressure," McCarthy said.

Solid overnight gains in commodity prices helped lift the metals and mining index .AXMM more than 2 percent as it shrugged off losses in the broader market, with prices welcoming China's plan to boost fiscal support for its economy.

BHP BHP.AX was the biggest gainer in an overall weaker market, rising as much as 2.7 percent, while fellow global miner Rio Tinto (LON:RIO) RIO.AX was up as much as 2.5 percent.

London copper soared 2.7 percent overnight to a two-week peak of $6,328.00, while zinc rose 2.4 percent and nickel advanced 1.5 percent. MET/L

Bauxite miner Alumina AWC.AX was among the top gainers on the metals and mining index, backed by aluminium prices hitting a two-week high on Tuesday. MET/L

a2 Milk Company ATM.NZ picked up from its gains in the previous session and supported New Zealand's benchmark S&P/NZX 50 index .NZ50 0.4 percent rise to 8,933.05.

a2 Milk rose around 2 percent after a late surge on Tuesday saw the company shrug off a recent run of heavy losses.

For more individual stocks activity click on STXBZ

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