The Australian share market lost ground amid widespread losses, including sharp falls in the telco sector following Telstra’s earnings warning.
The benchmark S&P/ASX200 index dropped 0.6 per cent to 6,097.8 points and the broader All Ordinaries index shed 0.6 per cent to 6,198.7 points.
All sectors of the market were weaker, with the exception of IT stocks, and the telco sector was the worst performer, tumbling 5.1 per cent.
Patersons Securities economist Tony Farnham said National Australia Bank was another significant weight on the market, as it was trading ex-dividend.
The telco sector’s woes were a result of Telstra’s warning on Monday that competition and the NBN was putting pressure on its earnings, he said.
“If you have the major gorilla in the space saying ‘we’ve got to the lower end of our guidance range because of competitive tension in fixed line and mobile’, well if that’s the case then it will be the same for the others,” Mr Farnham said.
“People are questioning whether Telstra and the others are going to get their growth from and there are concerns about whether Telstra’s dividend will remain intact.”
Citi analysts said they no longer believe Telstra’s current dividend was sustainable beyond 2017/18.
Shares in Telstra dropped 5.6 per cent to $2.87, their lowest level in seven years.
TPG Telecom lost 2.9 per cent to $5.37 and Vocus Group shed 4.4 per cent, to $2.59.
National Australia Bank fell 3.4 per cent to $27.52, while Westpac was steady at $30.01, ANZ rose 0.4 per cent to $27.74 and Commonwealth Bank gained 0.2 per cent to $70.92.
Mining and energy stocks were weaker, with BHP Billiton down 0.7 per cent at $33.55, Rio Tinto off 1.1 per cent to $83.61 and Woodside Petroleum 1.4 per cent lower at $33.51.
Mr Farnham said investment, retail and home sales data out of China were largely in line with market expectations, and appeared to have little impact on the share market and Australian dollar.
The minutes of the Reserve Bank’s May board meeting confirmed what was already widely known, he added, with weak wage growth and consumer spending still a concern for the central bank.
ON THE ASX:
* The benchmark S&P/ASX200 was down 37.5 points, or 0.61 per cent, at 6,097.8 points
* The broader All Ordinaries index was down 36.3 points, or 0.58 per cent, at 6,198.7 points
* The SPI200 futures contract was down 27 points, or 0.44 per cent, at 6,095 points.
* National turnover was 3.2 billion securities traded worth $6.8 billion
CURRENCY SNAPSHOT AT 1700 AEST:
One Australian dollar buys:
* 75.18 US cents, from 75.47 US cents on Monday
* 82.58 Japanese yen, from 82.63 yen
* 63.01 euro cents, from 63.13 euro cents
* 55.45 British pence, from 55.70 pence
* 108.77 NZ cents, from 108.67 NZ cents
The spot price of gold in Sydney at 1700 AEST was $US1,311.90 per fine ounce, from $US1,319.08 per fine ounce on Monday.
BOND SNAPSHOT AT 1630 AEST:
* CGS 5.75 per cent May 2021, 2.199pct, from 2.1488pct on Monday
* CGS 2.25pct May 2028, 2.8302pct, from 2.7726pct
Sydney Futures Exchange prices:
* June 2018 10-year bond futures contract was 97.16 (implying a yield of 2.84pct), from 97.215 (2.785pct) on Monday
* June 2018 3-year bond futures contract was 97.76 (2.24pct), from 97.81 (2.19pct)
(*Bond market closes taken at 1630 AEST previous local session; currency closes taken from 1700 AEST previous local session)