MELBOURNE: Australian shares were hit with a fresh wave of selling Friday, wiping out gains for the week. Investors took profits after gains the last three days as caution took hold across the Asia-Pacific and as the local market braced for the start of corporate earnings season, which unofficially begins Tuesday. In the sharpest single-day drop in a month, the S&P/ASX 200 lost 82.2 points, or 1.4%, to settle at 5702.8. Losses were notched up across the board, with the major banks pulling back on their recent recovery and utilities, health-care and industrial companies particularly weak.
Australian trading has been volatile the last few sessions, in part as the local currency has perked up against a softer U.S. dollar that hasn’t been helped by uncertainty around the Trump administration and somewhat dovish comments from the Federal Reserve, said Shane Oliver. “The rising Australian dollar is not good for the economy,” Mr. Oliver said, adding it has strengthened despite numerous attempts by the Reserve Bank of Australia to calm down interest-rate expectations and after lower-than-anticipated quarterly inflation data. The ASX 200 has traded in a relatively narrow range since mid-May, and analysts are looking to the coming earnings reports as a potential catalyst for it to break out. For the day, 2.42 billion shares were traded with a value of 6.99 billion Australian dollars (US$5.57 billion), Commonwealth Securities said.
The banks were the biggest drag on the market, as Australia & New Zealand Banking led the major lenders lower. National Australia Bank lost 1.8%, Westpac Banking was down 1.7% and Commonwealth Bank shed 1.5%. Macquarie sank 2.7% to finish lower for the week, wiping out third day of gains Thursday that came after it reaffirmed earnings guidance for the current fiscal year. Diversified miners BHP Billiton and Rio Tinto dropped 1.3% and 1.2%, respectively, and South32 was 2.1% lower. However, Fortescue Metals Group rallied 3.4% to cap a strong week as analysts raised their targets on the stock following the release of its quarterly production report. Among energy shares, Woodside Petroleum slipped 0.5% and Oil Search was 1.5% weaker, but Santos picked up 0.3%.