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Mining sell-off pulls down Aussie shares

Generic ASX. Picture: NewsWire / Christian Gilles
Generic ASX. Picture: NewsWire / Christian Gilles

Australia’s commodity heavyweights have dragged the sharemarket into the red on Wednesday, with another dip in iron ore prices producing a sell-off in large-cap mining stocks.

The benchmark ASX200 slipped 12.9 points, or 0.17 per cent, to finish at 7816.8, while the broader All Ordinaries index dipped 16.9 points, or 0.21 per cent, to 8058.3.

Tech stocks traded flat to finish at 3109.7.

The market recovered throughout the afternoon from a sharp morning slump, with the benchmark hitting a low of 7783 at the opening bell.

Six of 11 industry sectors ended in the red, with utilities propelling the fall with a 1.3 per cent decline.

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Market heavyweights BHP, Rio Tinto and Fortescue all fell as iron ore prices slipped below $110 a tonne.

BHP shed 1.3 per cent to $43.17 a share, while Rio fell 1 per cent to $119.37 and Fortescue lost 1.2 per cent to $21.60.

Energy stocks also struggled, with Woodside Energy edging down 0.27 per cent to $28.51 and Santos dipping 0.37 per cent to $7.89.

The big banks were mixed after Commonwealth Bank’s record high on Tuesday.

The financial giant slipped 0.11 per cent on Wednesday to $128.54, while NAB traded flat to close at $35.82.

Westpac lost 0.58 per cent to finish at $27.52 while ANZ gained 1.4 per cent to $29.70.

AUSTRALIAN STOCK EXCHANGE
The Australian sharemarket edged lower in Wednesday’s trading. Picture: NewsWire / Jeremy Piper

“You’ve got this situation in Australia where we’ve got the major banks trading on their records without any news flow,” RBC Capital Markets head of equities MD Karen Jorritsma said.

“We’re not reporting or anything like that. That’s just where the market is putting all the money, into the big cap stocks, into the top end of the index.

“The US is being driven by the mega-techs and those things but we are not being driven by that.

“Our market is being solely supported by the heavy lifting done by the financials.”

Wednesday’s dip on the local bourse contrasted sharply with another positive session on Wall St overnight Tuesday, with the S&P 500 and Nasdaq climbing to fresh highs again following prepared remarks from US Federal Reserve chairman Jerome Powell to the US Congress.

In closely-watched testimony, Mr Powell said: “elevated inflation is not the only risk we face. Reducing policy restraint too late or too little could unduly weaken economic activity and employment,” which investors have interpreted to mean a likely pivot to rate cuts before the end of the year.

“The Fed chair reiterated that the Fed was seeking confirmation of inflations further progress towards the Fed 2 per cent target while noting that the labour market has cooled considerably’ and ‘appears to be fully back in balance’,” IG market analyst Tony Sycamore said.

Rio Tinto's Channar iron ore mine in the Pilbara. Iron ore miners are falling as prices slip. Picture: Rio Tinto.
Rio Tinto's Channar iron ore mine in the Pilbara. Iron ore miners are falling as prices slip. Picture: Rio Tinto.

“We believe the Fed will use either the July Federal Open Market Committee meeting or the Jackson Hole Symposium to signal that a first rate cut is coming at the Fed’s September meeting.”

The Aussie dollar gained 0.03 per cent against the Greenback to buy US67.4c at the closing bell.

In corporate news, Bell Financial jumped 3.3 per cent to $1.40 after announcing an expected first-half profit of $23.8m, a 47 per cent increase on the prior corresponding period.

“The result reflects an improved performance in our retail and wholesale broking business and continued meaningful contributions from our technology and platforms and products and services businesses,” the company said.

The top gainer on the ASX200 was embattled gaming company Star Entertainment, which leapt 3 per cent to 50.5c.

The largest laggard on the ASX200 was wealth manager Insignia Financial, which tumbled 7.2 per cent to $2.32 after repudiating reports of possible takeover bids from private equity groups.