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Australian shares extended losses for a third day, defying better-than-expected GDP data and a jump in iron ore prices, as investors dumped shares to buy bonds after US and European bond yields surge.
The S&P/ASX 200 index dropped 1 per cent or 58.7 points to 5,577.3 by 0313 GMT , after GDP data rose 0.9 per cent in the first quarter.
The benchmark fell the most in four weeks on Tuesday after the central bank’s decision to leave interest rates unchanged. It has fallen each month from March and is already down 3.4 per cent in June so far.
“Certainly a tough day and a little bit of a surprise given the positive leads that we’ve had from overseas,’’ Michael McCarthy, Chief Markets Strategist, CMC Markets said.
“It’s pretty clear there’s pressure on the Australian yielding plays and we’re seeing some of the market darlings under extreme pressure. It’s not going to be GDP to the rescue today.’’
Banks who are loved by investors for their strong dividend yields were heavily hit with Commonwealth Bank of Australia and Westpac falling about 1 per cent each.
Virtus Health Ltd fell for a second day on concerns about its outlook after it slashed its earnings forecast.
Mining stocks were the lone bright spot on the index after iron ore futures rose to a three-week high on Tuesday. BHP rose 0.7 per cent and Rio Tinto was up nearly 2 per cent.
Although Wall Street finished lower, gains in energy stocks and optimism Greece was nearing a deal with creditors softened losses.
New Zealand’s benchmark NZX50 share index was marginally softer at 5,861.22, as the market returned to more sedate trading after the previous session's large takeover deal.
Fuel retailer Z Energy retreated 2.9 per cent from the record levels as investors booked profits and looked in more detail at competition issues for the proposed NZ$785 million deal to buy the New Zealand downstream operations of Chevron .
Utilities investor Infratil, which has a 20 per cent stake in Z Energy, was down 4.1 per cent on the combined effect of paying out a dividend and profit-taking.
Offsetting some of the decline was electricity lines and gas distributor Vector, which was up 2.2 per cent to a one-month high, after it said it was looking at the possible sale of its gas pipelines and non-Auckland gas distribution after receiving unsolicited interest in the business.
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