Shares fall on political uncertainty

Petrina Berry
(Australian Associated Press)

The share market has fallen due to investor caution ahead of UK Prime Minister Theresa May’s Brexit speech and US president-elect Donald Trump’s inauguration.

The benchmark S&P/ASX200 dropped 0.85 per cent, while the Australian dollar gained ground to return above 75 US cents.

Phillip Capital senior client adviser Michael Heffernan said investors were waiting for Theresa May’s speech on Tuesday night, Australian time, in which she is expected to outline her plans for exiting the European Union.

He said some could be nervous about how quickly the UK will exit.

There are also concerns about US president-elect Donald Trump’s trade policies in the lead up to his inauguration on Friday.

“People could be nervous about how soft or hard Brexit will be and about Donald Trump policies,” Mr Heffernan said.

“There’s been a bit of weakness in overseas markets because Donald Trump has been talking about getting rid of free trade.”

The local share market is also pulling back after a strong run in recent weeks, Mr Heffernan said, illustrated by Tuesday’s fall for the big four banks.

ANZ fell 1.3 per cent to $30.40, National Australia Bank declined 1.1 per cent to $30.80, Commonwealth Bank shed 0.9 per cent to $83.35 and Westpac gave up 0.9 per cent to $32.77.

Despite early gains, the resources sector also lost ground, though gold miners improved as the gold price was boosted by investor caution.

Rio Tinto slipped 0.8 per cent to $62.70 and BHP Billiton fell 0.2 per cent to $26.71, while gold miner Newcrest gained 1.7 per cent to $21.97.

ON THE ASX:

* The benchmark S&P/ASX200 dropped 49 points, or 0.85 per cent, to 5,699.4 points.

* The broader All Ordinaries index dropped 48.3 points, or 0.83 per cent, to 5,754.7 points.

* The March SPI200 futures contract was down 49 points at 5,654 points.

* National turnover was 2.48 billion securities traded worth $5.07 billion.

CURRENCY SNAPSHOT AT 1700 AEDT:

One Australian dollar buys:

* 75.24 US cents, up from 74.77 cents on Monday

* 85.35 Japanese yen, from 85.25 yen

* 70.63 euro cents, from 70.39 euro cents

* 62.14 British pence, from 62.16 pence

* 105.19 New Zealand cents, from 105.39 NZ cents

GOLD:

The spot price of gold in Sydney at 1700 AEDT was $US1,211.90 per fine ounce, up $US8.00 from $US1,203.90 on Monday.

BOND SNAPSHOT:

* CGS 5.25 per cent March 2019, 1.855pct, up from 1.854pct on Monday.

* CGS 4.25pct April 2026, 2.641pct, up from 2.637pct.

Sydney Futures Exchange prices:

* March 2017 10-year bond futures contract at 98.0 (implying a yield of 2.0pct), up from 97.265 (2.735pct) on Monday

* March 2017 3-year bond futures contract at 97.27 (2.73pct), down from 98.0 (2.0pct).

(*Currency closes taken at 1700 AEDT previous local session, bond market closes taken at 1630 AEDT previous local session)

SOURCE: IRESS

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