Stocks close deep in the red

The local market was weighed heavily by resources stocks, amid an increasing focus on Fed tightening.

The Australian sharemarket has ended deep in the red as a rare double upgrade in the rating of ANZ stock failed to offset weakness in the resources sector.

At the closing bell, the benchmark S&P/ASX 200 index gave back 44.4 points, or 0.81 per cent, to 5,433.9, while the broader All Ordinaries index dipped 44.1 points, or 0.79 per cent, to 5,529.4.

It represented the weakest close for the local bourse since July 15.

CMC Markets chief market analyst Ric Spooner said the failure to retain Tuesday’s gains was a sign of caution on the rising prospect of a US rate hike, but markets were still seen unlikely to break sharply lower in the near-term.

“The potential for the Fed to gradually lead international central banks out of the current stimulus phase is making investors wary about pushing stocks up to higher valuations,” he said.

“At the same time, markets remain confident that the Fed’s tightening cycle will be very gradual.

“This means it will be some time before rates rise to the extent that they warrant lower equity valuations and is helping support stocks in the current trading range.”

The story of the day was the pressure put on commodities by a rising US dollar, with base metals, crude and precious metals all battling to regain momentum.

Resources stocks were shunned in response, with BHP Billiton slumping 3.2 per cent to $20.43, Fortescue tumbling 3.5 per cent to $4.90 and Rio Tinto skidding 2.7 per cent to $47.60.

In energy, Santos eased 1.3 per cent to $4.44 and Woodside slipped 0.8 per cent to $28.63.

The big banks were mixed, with ANZ and Commonwealth Bank serving as the markers for the broader sector.

ANZ led the way with a jump of 1.4 per cent after a double upgrade from Morgan Stanley analysts, while CBA lagged with a 1.5 per cent loss after a downgrade from the same investment bank.

Elsewhere, NAB tacked on 0.4 per cent and Westpac retreated 0.6 per cent.

The reporting season officially wrapped up with a strong beat from Harvey Norman capturing the market’s eye.

The retailer surged to a post-GFC high during the session, before paring gains to end up 2.7 per cent.

A few other mid-sized names also left their run late, with miner Independence Group sliding 3.7 per cent after swinging to a loss, embattled iron ore miner Atlas Iron rebounding 10 per cent from its depressed 1c level on a mixed update, livestock exporter Wellard plunging 13.6 per cent as it aborted a dividend plan and warned on the risk of an October default event and Adelaide Brighton stumbling 4 per cent as its half year earnings softened.

Meanwhile, IP law firm QANTM soared 12.6 per cent on debut, while Estia Health lost 1.1 per cent as its founder quit the board.

Among blue chips, Telstra dipped 0.6 per cent to $5.26, while Qantas ended flat at $3.24.

Meanwhile, the Australian dollar ended local trade at US75.1c, steadying through the day after an offshore sell-off.