Global tensions, weak resources weigh on local sharemarket

Risk-off sentiment drags on the sharemarket as geopolitical concerns and a five-month low for iron ore play into trade.

Risk-off sentiment drags on the sharemarket as geopolitical concerns and a five-month low for iron ore play into trade.

Australian stocks have copped their heaviest sell-off in a month as geopolitical worries forced a risk-off approach from traders.

The local market shed over $15 billion as a new five month-low in iron ore weighed on the resources giants.

At the close, the benchmark S&P/ASX 200 slumped 53.2 points, or 0.90 per cent, to 5,836.7, while the broader All Ordinaries lost 57.2 points, or 0.97 per cent, to 5,868.7.

It represented the worst day of trade since March 22, although crucially the benchmark managed to end just above key technical support at 5,830 points.

The negative start to the holiday-shortened week could, however, be quickly forgotten with a number of crucial events of the horizon.

“It promises to be an interesting week, especially with such heightened concerns at a geopolitical level, 17 per cent of the S&P 500’s market capitalisation reporting and the final stages of the French elections upon us,” IG chief market strategist Chris Weston said.

Geopolitical concerns are at the forefront of investors’ minds for now, as aggressive rhetoric from US President Donald Trump stokes tensions with North Korea.

“It seems the focus is now firmly on future missile tests from North Korea and whether any future tests will actually be successful,” Mr Weston said.

“From here, it would all be down to Mr Trump and his allies and what their reaction would be, but we can believe that markets will not take kindly to this.

“For now though, the hope is on an increased prospects for talks, potentially incorporating China more into any negotiations.”

Investors have been shying away from commodities over the past few sessions given renewed caution, although the brunt of selling has been felt in the iron ore market as investors fret over the prospect of a glut.

The key Australian export tumbled below $US65 a tonne on Monday night for the first time since November 3 and futures markets pointed to further falls Tuesday.

It put pressure on the local miners as Fortescue plunged 7.5 per cent to $5.09, BHP skidded 1.6 per cent to $23.93 and Rio Tinto surrendered 1.9 per cent to $58.00.

In energy, Santos stumbled 3.2 per cent to $3.68 as oil prices retreated, while Woodside edged down 0.4 per cent to $33.01.

The banks were all in the red despite a positive open, with NAB and Westpac off 0.7 per cent, ANZ down 0.8 per cent and CBA 0.9 per cent weaker.

Elsewhere, Telstra extended its recent slide, tumbling 3.8 per cent to $4.00, while peers Vocus and TPG slumped 3.4 and 17 per cent, respectively. The latter was hampered by reopening after a capital raising that caused dilution.

Meanwhile, the Australian dollar slipped back to US75.55c, moving well away from the US76c mark in local trade in light of iron ore softness.