Australian shares have fallen on Thursday with banking and utilities stocks down, while the turmoil around the future of Prime Minister Malcolm Turnbull has taken its toll on the Aussie dollar.
The benchmark S&P/ASX200 index ended Thursday down 21.6 points, or 0.34 per cent, to 6,244.4 points, while the All Ordinaries was down 13.5 points, or 0.21 per cent, to 6,360.3 points.
Mr Turnbull’s tenure looked doomed on Thursday as some senior ministers resigned and withdrew their support and the sitting of the House of Representatives was adjourned early.
Mr Turnbull said he would hold a leadership vote on Friday – after winning a ballot on Tuesday – only if he received a letter signed by a majority of Liberal party legislators.
The Aussie dollar was trading more than 0.8 per cent lower against the US dollar during the day and at 1700 AEST was down 0.6 per cent at 72.96 US cents, from 73.42 US cents on Wednesday.
“We are seeing elevated sovereign risk in our country, I think it looks like the Prime Minister is going to get knocked off any minute now, so there is definitely sovereign risk here compared with emerging markets,” said Mathan Somasundaram, market portfolio strategist at Blue Ocean Equities.
Nomura rate strategist Andrew Ticehurst said while some $A losses were due to US dollar gains, the day’s developments were “a modest but notable negative”.
Financials were a major factor in ASX losses but the materials and energy sectors were bulwarks against a steeper fall.
Commonwealth Bank fell 1.6 per cent to $70.75, and ANZ Bank fell 1.7 per cent to $28.72.
Mr Somasundaram said money parked in Australian financials was being redeployed as trade war fears eased somewhat, sending funds to growth-oriented investments.
In companies news, Qantas finished down 2.8 per cent at $6.53, despite reporting a record annual profit, as it flagged a rise of about $690 million in its 2018/19 fuel bill.
Mr Somasundaram said Qantas had benefited from hedging its fuel costs in the oil market, “but now that is all unwinding”.
Online travel group Webjet soared $2.64, or 18.2 per cent, to $17.12 after posting a 63 per cent jump in underlying full-year profit.
South32 lifted 4.9 per cent to $3.42 after boosting full-year profit by eight per cent to $1.8 billion.
Australian energy stocks rose 0.8 per cent, after oil prices slipped but maintained much of the three per cent rise recorded on Wednesday after a larger-than-expected draw in crude inventories and as US sanctions on Iran signalled tightening supply.
The sector index’s move was helped by gains in stocks such as Santos, up 11.3 per cent to $6.98 after it reported a near-doubling of underlying profit in the first half and revived its dividend.
Santos agreed on Wednesday to buy privately held Quadrant Energy for at least $US2.15 billion, grabbing what may be the biggest oil find off Western Australia in more than 20 years.
ON THE ASX:
* The benchmark S&P/ASX200 closed down 21.6 points, or 0.34 per cent, at 6,244.4 points
* The All Ordinaries was down 13.5 points, or 0.21 per cent, at 6,360.3 points
* In futures trading the SPI200 futures index was down 15 points, or 0.24 per cent, at 6,221 points at 1630 AEST
CURRENCY SNAPSHOT AT 1700 AEST:
One Australian dollar buys:
* 72.96 US cents, from 73.42 US cents on Wednesday
* 80.869 Japanese yen, from 81.07
* 63.09 euro cents, from 63.48
* 56.66 British pence, from 56.92
* 109.27 NZ cents, from 109.66
The spot price of gold in Sydney at 1700 AEST was $US1,190.33 per fine ounce, down from $US1,193.64 per fine ounce on Wednesday.