Australian sharemarket dragged lower by iron ore stocks as China implements anti-pollution measures

The ASX was dragged lower by iron ore stocks after new anti-pollution measures in China sent the price of the steelmaking commodity tumbling.

Iron ore stocked dragged the Australian sharemarket lower on Wednesday after new anti-pollution measures in China sent the price of the steelmaking commodity tumbling.

The S&P/ASX200 closed 0.84 per cent lower at 6714.1 while the All Ordinaries Index dropped 0.76 per cent to 6947.2.

Ivan Tchourilov, chief executive of OpenMarkets Group — which closed an oversubscribed pre-IPO round as its business-to-business arm became Australia’s second-largest retail broker behind CommSec — said the ASX gave up early gains after a positive US lead.

Iron ore prices slumped about 6 per cent overnight, triggering a massive sell-off in Fortescue, Rio Tinto and BHP.

S&P Global Platts said the price drop came after spot iron ore procurement in Tangshan, China’s top steel producing province, was slowed sharply by strict environmental controls in response to “heavy pollution weather” on Sunday.

Chinese workers pack steel rolls in a steel factory in Tangshan, Hebei province. Picture: AFP/Fred Dufour

Rio Tinto slumped 5.54 per cent to $114.49, BHP erased 2.84 per cent to $47.60 and Fortescue plunged 8.34 per cent to $20.33.

The big four banks were also a major weight on the market. ANZ backtracked 2.03 per cent to $28.51, Commonwealth Bank gave up 1.33 per cent to $86.72, National Australia Bank reversed 1.54 per cent to $26.24 and Westpac lost 1.28 per cent to $24.60.

Tech stocks in the US bounced back with gusto overnight as the Nasdaq recorded one of its biggest gains of this year, closing 3.96 per cent higher.

“Local tech stocks have welcomed the overseas rally and are higher today after two weeks of solid selling,” Mr Tchourilov said.

PayPal announced it would roll out its buy-now-pay-later product in Australia in early June, and with more than 9 million existing customers here, the company should take market share off the big two, Afterpay and Zip, Mr Tchourilov said.

PayPal’s entry into Australia’s buy-now-pay-later sector is expected to steal market share from Afterpay and Zip. Picture: Richard B Levine/Zuma Press

While Afterpay jumped 7.53 per cent to $115.26, Sezzle slid 1.78 per cent at $7.72, Laybuy eased 0.83 per cent to $1.19 and Zip shed 3.87 per cent to $8.44.

Zip announced it had been selected by Nasdaq-listed BigCommerce as an “elite partner” to provide its digital payment options to the US company’s global network of more than 60,000 merchants.

Despite Afterpay’s gains, it was the single most sold stock on Tuesday across the OpenMarkets client base, who were possibly taking profits to solidify last year’s gains, Mr Tchourilov said.

Afterpay announced it had completed an acquisition in preparation for its expansion into Europe, with Spain, France and Italy the first countries to get its Clearpay service.

Treasury Wine Estates added 2.88 per cent to $11.42 after announcing progress on plans to develop a premium-focused business in the US, reaching an agreement with The Wine Group for its Beringer Main & Vine, Beringer Founders’ Estate, Coastal Estates and Meridian brands in the Americas.

Treasury Wine Estates is advancing its premium wine plan in the US. Picture: Aaron Francis/The Australian

Gold miners rose on the back of higher prices for the precious metal.

Ramelius Resources surged 9.79 per cent to $1.57, Silver Lake Resources jumped 7.33 per cent to $1.61 and Gold Road Resources rose 5.19 per cent to $1.11 after unveiling its inaugural full-year net profit and maiden dividend.

The Aussie dollar was buying 76.72 US cents, 55.39 British pence and 64.61 Euro cents in afternoon trade.

Originally published as Australian sharemarket dragged lower by iron ore stocks as China implements anti-pollution measures