Stocks slip on weak Wall Street lead

The local market has followed Wall Street lower in early trade, as investors eye the prospect of a US rate hike.

 

The Australian sharemarket has followed Wall Street lower in early trade as investors eyed the prospect of an imminent lift in US interest rates.

At the 10.15am (AEDT) official market open, the benchmark S&P/ASX 200 index dipped 15.7 points, or 0.29 per cent, to 5,462.8, while the broader All Ordinaries index gave back 15.1 points, or 0.27 per cent, to 5,549.7.

CMC Markets chief market strategist Michael McCarthy said better-than-expected US data weighed on offshore equities.

“The US dollar surged and defensive stocks fell as investors drew a straight line to higher US interest rates,” he said.

“Utilities were hardest hit as investors’ trimmed interest rate exposed assets, and gold slumped. Other defensive sectors such as property and consumer staples may feel the downdraft today.

“Initial weakness may be tempered by the release of local [building approvals] numbers this morning and an RBA decision this afternoon.”

Analysts widely anticipate rates to remain on hold today, although investors will carefully search the official statement for any hints on the future of monetary policy.

“New Governor Lowe is likely to show continuity with the approach of his predecessor, demonstrating a safe transition and a stable monetary environment,” Mr McCarthy said.

High-yielding and defensive stocks lagged in early deals, with the banks, utilities and healthcare underperforming.

The big four banks were all in the red, with NAB’s 0.7 per cent retreat the lowpoint and Westpac’s 0.3 per cent fall the high-water mark for the sector.

The resources sector shone in comparison, aided by another rise in the price of crude.

In energy, Santos jumped 1.4 per cent to $3.75, Origin Energy was steady at $5.52, while Woodside inched up 0.1 per cent to $28.89.

In materials, gains came despite a mixed showing from base metals overnight.

BHP Billiton tacked on 0.1 per cent to $22.78, Rio Tinto gained 0.2 per cent to $51.98 and Fortescue traded flat at $4.89.

Among other blue chips, Telstra weakened 0.3 per cent to $5.185, while Qantas lifted 0.6 per cent to $3.16.

Meanwhile, the Australian dollar edged up to US76.9c ahead of the RBA’s policy meeting.