Australia shares droop on U.S. Fed taper, Treasury Wine slumps

Reuters - UK Focus

(Adds analysis, quotes, stocks on the move)

SYDNEY, Jan 30 (Reuters) - Australian shares lost 0.9percent on Thursday after Wall Street dropped overnight as theU.S. Federal Reserve decided to continue tapering itsbond-buying programme.

A slump in Australia's Treasury Wine Estates Ltd also dragged on the market. It fell 17.5 percent to a neartwo-year low of A$3.76, after downgrading its full-year earningsguidance by almost a fifth on weak demand in China and stiffcompetition in its home market.

The 'Big Four' banks all posted losses with CommonwealthBank of Australia, the country's biggest bank by marketcapitalisation, and Westpac Banking Corp both falling0.9 percent. Mid-cap Bendigo and Adelaide Bank Ltd slipped 0.3 percent.

U.S. stocks dropped more than 1 percent overnight, afterthe Federal Reserve stuck with its plan to scale back stimulusby another $10 billion even in the midst of emerging marketturmoil.

The S&P/ASX 200 index lost 45.4 points to 5,183.6 by0051 GMT, after touching a session low of 5,161.5. The benchmarkrose 1 percent on Wednesday.

"Markets continued to be concerned that Fed tapering maytrigger ongoing volatility in some emerging currencies asinvestors withdraw funds from those markets," noted Chay Flack,an equities dealer at CMC Markets Stockbroking.

"Tapering will be an ongoing theme throughout the year."

The ASX has had a spiritless start to the year, falling 3.2percent so far in January as slowing growth in China and fearsover Fed tapering have led investors to step away from equities.

Australia's sharemarket has slightly outperformed thebroader region, with MSCI (NYSE: MSCI - news) 's broadest index of Asia-Pacificshares outside Japan losing 5 percent over themonth.

Major resource stocks were in freefall as spot iron orehovered near the lows seen in July, pressured by weaker steelprices in top consumer China, and as trading activity winds downahead of the Lunar New Year.

Bluechip miner BHP Billiton Ltd lost 0.9 percentwhile rival Rio Tinto Ltd (Xetra: 855018 - news) slipped 0.5 percent. IlukaResources Ltd dropped 1.5 percent.

The market's only reprieve was gold, which rose in choppytrade as global equities slumped. Newcrest Mining Ltd added 0.6 percent while Beadell Resources Ltd (Other OTC: BDREF - news) climbed4.3 percent.

Navitas Ltd lost 2.3 percent after the educationservices provider reported its net profit after tax at A$36.1million, an increase of 3 percent. However, the company saidstudent numbers had fallen in its Asia and African colleges.

Beach Energy Ltd fell 2.1 percent after reportingDecember quarter revenue of A$173 million, compared to A$287million in the previous corresponding period.

New Zealand's benchmark NZX 50 index shed 0.8percent to 4,841.4.

(Reporting by Thuy Ong; Editing by Eric Meijer)

View Comments (0)