Miners feel pinch on developing markets
The benchmark S&P/ASX 200 Index was down 34.3 points, or 0.67 per cent, at 5078.2 points. The broader All Ordinaries Index was 33.5 points lower, or 0.66 per cent, at 5068.8 points.
The top 20 developing nation currencies have tumbled against the US dollar, as financial markets expect the US Federal Reserve to taper its mass bond buying stimulus measures from September.
The 0.7 per cent fall in the Australian market on Tuesday occurred as the India rupee hit an all-time low against the greenback and Japan's Nikkei lost 2.6 per cent.
IG markets strategist Chris Weston said a sharp rise in US Treasury bond yields was squeezing demand for assets in developing markets. "It's a story of emerging market weakness, basically," he said. "The move we've seen in the developed market bond market is killing the emerging market trade right now: places like India, Malaysia, Indonesia, Brazil; all their currencies are getting absolutely smashed."
The big resource companies were affected, with BHP Billiton losing 50¢ to $36.54 as Rio Tinto ditched 63¢ to $59.51.
After the local market closed, BHP announced a 29.5 per cent fall in full-year net profit to $US10.9 billion ($12.03 billion).
The big four banks had mixed fortunes, with National Australia Bank gaining 21¢ to $31.57 after posting a $1.7 billion net profit for the three months to June.
ANZ was also up, adding 1¢ at $29.56, but Commonwealth Bank was down 88¢ at $70.27, and Westpac shed 43¢ at $31.14.
Investors appeared to overlook minutes from the Reserve Bank's August meeting, where members agreed the possibility of closing off more rate cuts should be considered.
Meanwhile, QBE Insurance Group shares lost 93¢, or 5.46 per cent, to $16.10 after posting a 37 per cent fall in half-year net profit to $US477 million ($526.29 million), following a fall in demand for US mortgage insurance.
National turnover was 1.7 billion securities worth $4.3 billion.
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The ASX fell as investor concerns about emerging markets and a stronger US dollar hit resource stocks. The S&P/ASX 200 closed down 34.3 points (‑0.67%) at 5,078.2 and the All Ordinaries fell 33.5 points (‑0.66%) to 5,068.8, with developing-nation currency weakness and expectations the US Federal Reserve will taper bond-buying cited as key drivers.
Rising US Treasury yields and talk of Fed tapering are squeezing demand for assets in developing markets, which weakens emerging-market currencies and reduces appetite for resource stocks. IG Markets strategist Chris Weston said the move in developed-market bond yields is 'killing the emerging market trade' and currencies in places like India, Malaysia, Indonesia and Brazil have been hit hard.
Big resource names were hit: BHP fell 50¢ to $36.54 and Rio Tinto dropped 63¢ to $59.51, reflecting the wider sell-off in resource stocks tied to emerging-market and currency pressures.
After the market closed, BHP announced a 29.5% fall in full-year net profit to US$10.9 billion (A$12.03 billion), a result reported in the same trading session that saw its share price fall.
The big four had mixed results: National Australia Bank rose 21¢ to $31.57 after reporting a $1.7 billion net profit for the three months to June; ANZ was up 1¢ at $29.56; Commonwealth Bank fell 88¢ to $70.27; and Westpac slipped 43¢ to $31.14. NAB's positive quarterly profit was a clear driver of its share gain.
QBE shares dropped 93¢ (5.46%) to $16.10 after the insurer reported a 37% fall in half‑year net profit to US$477 million (A$526.29 million), a decline the company linked to weaker demand for US mortgage insurance.
The RBA minutes from the August meeting showed members agreed the possibility of closing off further rate cuts should be considered. However, investors largely appeared to overlook the minutes on the trading day reported in the article.
National turnover was 1.7 billion securities worth $4.3 billion. That level of turnover reflects active trading during the session as markets reacted to emerging-market currency moves, corporate results and macroeconomic headlines.
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