Australian shares have dropped to their lowest since June in the wake of near-across the board falls triggered by increased US-China trade worries, falling world oil prices and a new round of mortgage rate hikes by local banks.
The benchmark S&P/ASX200 index closed down 70 points, or 1.12 per cent, at 6,160.4 points on Thursday, while the broader All Ordinaries index was down 71.4 points, or 1.13 per cent, to 6,267.8 points.
The Australian dollar was buying more than 72.10 US cents shortly after midday but had a sharp fall when ANZ and Commonwealth Bank announced they would increase variable mortgage rates.
The Aussie was buying 71.69 US cents at 1700 AEST, down from 71.74 on Wednesday.
JP Morgan interest rate strategist Sally Auld said the drop was likely due to investors worrying that a retail bank rate hike may sway the Reserve Bank of Australia from its recent indications the next move in official interest rates will be up.
"If the banks are raising mortgage rates, then the RBA certainly doesn't need to," Ms Auld said.
Ms Auld said Australia was facing a longer period of official rates on hold as many other countries around the world increase official rates.
"So all else equal, that's currency negative," she said.
The big four banks' shares rose last week following Westpac's rate hike and on Thursday CBA and ANZ's moves had little impact.
Westpac fell 0.4 per cent to $27.84, while Commonwealth Bank was the only major to finish higher, up 0.04 per cent at $70.14.
Oil prices fell on Thursday as emerging market woes weighed on sentiment and a deadline neared for a potential new round of US tariffs on another $US200 billion of Chinese goods.
Asian shares fell for a sixth straight session as oil skidded and safe-haven gold gained, with MSCI's broadest index of Asia-Pacific shares outside Japan falling 0.4 per cent to hit its lowest since mid-August.
Among local stocks, mining giant BHP weighed on the materials sector market, with shares falling 2.5 per cent to $31.40 as the stock went ex-dividend.
Telstra was up 3.3 per cent to $3.12 after trimming its 2018/19 earnings guidance because a lower than expected number of NBN customers are available for connection.
The telco giant said the NBN slowdown would be financially positive over the course of the full NBN rollout.
Sigma Healthcare shares slumped after the pharmaceuticals supplier revealed a fall of more than 50 per cent in first-half profit to $13.4 million, partly due to restructuring costs following the loss of its contract to supply Chemist Warehouse in July.
Sigma shares fell seven cents, or 11.6 per cent, to 53.5 cents.
On the ASX:
* The S&P/ASX200 closed down 70 points, or 1.12 per cent, at 6,160.4 points
* The All Ordinaries was down 71.4 points, or 1.13 per cent, at 6,267.8 points
* In futures trading the SPI200 futures index was down 71 points, or 1.14 per cent, at 6,144.0 points at 1630 AEST.
CURRENCY SNAPSHOT AT 1700 AEST:
One Australian dollar buys:
* 71.69 US cents, from 71.74 US cents on Wednesday.
* 79.85 Japanese yen, from 79.96
* 61.70 euro cents, from 62.02
* 55.55 British pence, from 55.90
* 108.99 NZ cents, from 109.57
GOLD:
The spot price of gold in Sydney at 1700 AEST was $US1,197.17 per fine ounce, up from $US1,192.68 per fine ounce on Wednesday.
The S&P 500 and Nasdaq declined on Thursday as the possibility of more U.S. tariffs on Chinese imports loomed and as tech stocks stumbled on warnings from chipmakers and concerns about increased regulation of social media companies.
Based on the latest available data, the Dow Jones Industrial Average .DJI rose 20.88 points, or 0.08 percent, to 25,995.87, the S&P 500 .SPX lost 10.55 points, or 0.37 percent, to 2,878.05 and the Nasdaq Composite .IXIC dropped 72.45 points, or 0.91 percent, to 7,922.73.
Source: Netwealth Morning Business Roundup
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