Australian shares have suffered their worst one-day performance since March as the Aussie dollar recovered slightly from a weak opening.
The benchmark S&P/ASX200 index slumped further to finish down 85.2 points, or 1.4 per cent, to 6,100.3 at 1630 AEDT, while the broader All Ordinaries was down 82.5 points, or 1.3 per cent, to 6,218.6.
Pepperstone head of research Chris Weston says further deterioration in US-Sino relations could be one of the factors to push the Aussie to break the US 70 cents barrier.
“There’s nothing working for the Australian dollar at the moment,” Mr Weston said, adding US Treasury bonds were also putting a dampener on the dollar.
The Aussie recovered from a rocky start to be buying 70.59 US cents at 1630 AEDT, up from 70.58 US cents on Friday.
The heavy materials sector was the worst hit, sliding 2.4 per cent off the back of falling aluminium and copper prices overnight and movement by China’s central bank to free up liquidity in the sector.
Shares in giant BHP were down 2.8 per cent to $34.50, while Rio Tinto fell 1.6 per cent to $78.76.
Aluminium miner South32 retraced some of last week’s gains to lose 5.4 per cent, while Alumina Limited was down seven per cent as word emerged Norsk Hydro’s Alunorte alumina refinery in Brazil would be staying open.
Banking shares also dropped off as chief executives prepare to face their first public grillings, beginning on Thursday, over rampant misconduct and potential breaches of legislation detailed in the royal commission’s interim report.
“We’ve got a very simple market,” Mr Weston said.
“When you’re seeing 2.3 per cent declines in the heavy materials sector you’re going to see falls elsewhere.”
ANZ shares took the biggest hit on Monday, falling 2.6 per cent to $26.99 after the lender flagged an $824 million hit to its full-year profit due to impairments and one-off expenses, more than half of it related to customer remediation.
NAB was down 1.25 per cent to $26.87, Westpac fell 1.3 per cent to $27.13, and Commonwealth Bank was down 0.9 per cent to $69.35 after announcing it would keep banking services running at Australia Post in an agreement worth $22 million a year.
The energy sector was also down more than a percentage point on steadying oil prices and looming US sanctions, with Caltex one of the only in the green.
Elsewhere, MYOB shares have soared by almost 20 per cent to $3.55 after private equity firm KKR & Co launched a full takeover bid, buying a 17.6 per cent stake in the cloud services provider.
ON THE ASX:
* The S&P/ASX200 was down 85.2 points, or 1.4 per cent, lower to 6,100.3 points.
* The All Ordinaries was down 82.5 points, or 1.3 per cent, lower to 6,218.6 points.
* In futures trading the SPI200 futures index was down 97 points, or 1.6 per cent, at 6077 points at 1645 AEDT.
CURRENCY SNAPSHOT AT 1645 AEDT:
One Australian dollar buys:
* 70.60 US cents, from 70.70 US cents on Friday.
* 80.34 Japanese yen, from 80.52
* 61.34 euro cents, from 61.42
* 53.86 British pence, from 54.24
* 1.09.56 NZ cents, from 109.27
The spot price of gold in Sydney at 1630 AEDT was $US1196.3 per fine ounce, down from $US1198.939 on Friday.