Australia shares post second weekly drop as iron ore miners hit multi-month lows

Australian shares ended lower on Friday in a second straight weekly drop, dragged down by iron ore miners hitting multi-month lows and surging coronavirus cases across parts of the country raising concerns over a delay in economic recovery.

The S&P/ASX 200 index fell 0.76% to close at 7,403.7, after ending 0.58% higher on Thursday.

The country’s second-largest state Victoria reported its second-highest daily rise in new infections this year, and one death even as Prime Minister Scott Morrison pledged more freedom for vaccinated citizens.

Major miners fell 4.4% as futures prices for Chinese steelmaking raw materials dropped, with the benchmark iron ore contract leading declines, as China mulls to include more cites under its environmental controls.

The country’s mining triumvirate – Rio Tinto, BHP Group and Fortescue Metals Group Ltd fell to multi-month lows, with Fortescue slumping up to 12%, its lowest in 14 months, while Rio and BHP hit nine-month lows.

“At a time when the Chinese provinces are looking forward to reducing steel output targets to curtail emissions, any further weakness in the iron ore price may not emerge as a surprise,” said Kunal Sawhney, chief executive officer of Kalkine group. “Moreover, tightening stimulus measures and Evergrande’s risk of default may prompt a slowdown in China’s property activity, putting some pressure on the iron ore price.”

Energy stocks fell 1.29?% tracking lower oil prices, as more supply came back online in the U.S. Gulf of Mexico following two hurricanes.

Heavyweight Whitehaven Coal Ltd and Beach Energy Ltd led losses on the sub-index, skidding 6.77% and 3.2%, respectively.

Bucking the trend, technology stocks rose 2.08% tracking overnight gains on the Nasdaq.

Buy now, pay later giant Afterpay led gains on the subindex, surging as much as 3.9% to mark best day since Aug. 6.

New Zealand’s benchmark S&P/NZX 50 index climbed 1.2% to end at 13,234.6.

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