Stocks break winning streak as resources weigh

Resources stocks have dragged the market more than half a percentage point lower.

The Australian sharemarket has broken this week’s winning streak as a rally in the nation’s two biggest banks failed to offset weakness in the resources space.

At the close, the benchmark S&P/ASX 200 index gave back 31.1 points, or 0.57 per cent, to 5,452.9, while the broader All Ordinaries index lost 32.9 points, or 0.59 per cent, to 5,537.

The red session followed a similarly lacklustre performance on Wall Street as fears were again raised on the risk extremely loose monetary policy would soon be unwound.

“We’ve been at an inflection point in financial markets for a few weeks now, with market participants sensing a changing tide among central banks,” IG chief market strategist Chris Weston said.

“The wash up has been a slight pick-up in implied market volatility with some signs of risk aversion that needs to be watched closely.”

The extent of the offshore action could cause jitters throughout the remainder of the week, CMC Markets chief market analyst Ric Spooner added.

“[The latest] moves may see investors remain cautious about the possibility of follow through selling in bonds, gold and stocks over coming days,” he said.

“Bond investors don’t want to be caught being late to respond to a scenario where the US Fed leads a gradual exit from current global central bank stimulus.”

Rising bond yields have dampened demand for commodities, particularly precious metals.

Gold suffered its heaviest fall for almost 18 months as the non-yielding asset was viewed as the biggest loser in an environment of rising rates.

In contrast, banks have the potential to win out from any change in policy that sees rates rise.

Australian investors viewed the situation as such, ensuring financials were among the outperformers of the soft session.

Commonwealth Bank rebounded 0.4 per cent, Westpac added 0.7 per cent, while ANZ and NAB went against the trend in edging down 0.2 per cent.

ANZ trailed as chief executive Shayne Elliott fronted a parliamentary inquiry, while NAB was held back by news of an outage impacting payment processing.

The resources sector was largely weaker given falls in gold, base metals and a slowdown in momentum in oil prices.

In energy, Woodside dipped 0.6 per cent to $28.90, Origin skidded 2 per cent to $5.42, while Santos bucked the trend to jump 1.6 per cent to $3.86.

In materials, BHP Billiton retreated 0.2 per cent to $22.85, Rio Tinto weakened 1.1 per cent to $51.90 and Fortescue slid 1.6 per cent to $4.82.

Gold stocks were punished more significantly, with Newcrest tumbling 5.1 per cent, Regis Resources diving 6.6 per cent and Evolution plunging 7.9 per cent.

Elsewhere, graphite miner Syrah Resources plummeted 23 per cent as managing director Tolga Kumova surprisingly resigned.

Among blue chips, Telstra gave back 1 per cent to $5.15, while Qantas slipped 0.6 per cent to $3.16.

Meanwhile, the Australian dollar moved higher through afternoon deals, ending the local session at US76.3c as it was aided by better-than-expected retail sales numbers.