Stocks close 1pc lower

Banks and retailers weighed heavily on the market as political and economic uncertainties linger.

The Australian sharemarket has slumped 1 per cent, driven lower by heavy selling of retailers and the major banks as data disappointed and the Reserve Bank kept rates on hold.

At the closing bell, the benchmark S&P/ASX 200 index stumbled 53.8 points, or 1.02 per cent, to 5,228, while the broader All Ordinaries index eased 52.4 points, or 0.98 per cent, to 5,312.8.

The red session was the first in five for the benchmark index, halting the sharp recovery from Brexit-related losses.

Again the financial sector was at the forefront, with its second day of losses unable to be offset by the materials sector on this occasion.

The big banks all closed around 1.5 per cent lower as investors eyed risks to margins from a perceived threat to Australia’s credit rating in the wake of the murky election result. Traders were also disappointed by the lack of a clear easing bias from the Reserve Bank in its monthly statement.

The central bank opened the door to an August rate cut, but the lack of a definitive sign it was ready to move again caught some traders off-guard.

“The reaction in the market said it all,” IG chief market strategist Chris Weston said.

“A number of traders were clearly positioned for the RBA to give a more definitive easing bias, perhaps a re-introduction of the view that ‘continued low inflation may provide scope’ to cut interest rates.”

Among the big four, NAB’s 1.6 per cent retreat was the heaviest, while Commonwealth Bank took the weakest hit with a 1.1 per cent loss.

The 1.3 per cent overall slide in financials was outdone by weakness in the retail space, however, as consumer discretionary stocks tumbled 1.9 per cent and consumer staples yielded 1.4 per cent.

The soft showing was driven by a weaker-than-expected 0.2 per cent gain in retail sales for the month of May.

Among the big names, Myer slumped 3 per cent to $1.12, Coles owner Wesfarmers backtracked 1.3 per cent to $39.75 and Woolworths slipped 0.96 per cent to $20.62.

The latter two were in the news as UBS warned on a potential escalation of the grocery price wars in coming months.

In mining, local heavyweight BHP Billiton was off 0.41 per cent to $19.45, while rival Rio Tinto inched down 0.02 to $47.77.

Iron ore group Fortescue weakened 1.5 per cent to $3.83 despite ore prices jumping past $US55 a tonne.

The broader materials sector ended with a modest decline of 0.4 per cent.

In energy, Santos gave back 0.63 per cent to $4.72, while Woodside Petroleum retreated 1.1 per cent to $26.50 after oil prices slid overnight.

Elsewhere, Telstra dipped 1.1 per cent to $5.51 and Qantas lost 0.79 per cent to $2.79.

Meanwhile, the Australian dollar slipped below US75c in late trade as investors continued to analyse the RBA statement for clues on the timing of any rate moves.