July 8, 2019 / 6:53 AM / 2 months ago

Aussie shares end lower on dampened U.S. rate cut hopes; NZ flat

* Broad-based losses drive Aussie shares lower

* Biggest one-day drop since June 3

* Miners, banks drag down benchmark

* Investors shift focus to Fed chairman’s testimony (Updates to close)

By Aditya Soni

July 8 (Reuters) - Australian shares fell the most in five weeks on Monday as better-than-expected U.S. employment data softened expectations for a Federal Reserve rate cut this month.

The S&P/ASX 200 index slid 1.2% or 79.10 points in lacklustre trading to end at 6,672.20, its biggest one-day drop since June 3. The benchmark firmed 0.5% on Friday.

Stock markets that had rallied on expectations of a U.S. monetary policy easing in July came under pressure on Monday after strong U.S. non-farm payrolls on Friday showed the world’s largest economy remained on track.

“The June payrolls number threw a spanner in the works for those participants looking for a 50bp cut to the Federal Funds rate at the upcoming FOMC meeting,” ANZ Research said in a note.

“This was the strongest non-farm payrolls print since January this year and suggests the U.S. economy still has firm footing,” it added.

Investors will focus on Fed Chairman Jerome Powell’s semi-annual testimony to Congress on Wednesday and Thursday for more cues on the near-term outlook for monetary policy.

Mining stocks hit a near three-week trough, leading decliners. BHP Group fell to its lowest since June 18, while rival Rio Tinto Ltd hit a two-week low.

The reduced chances for a Fed rate cut tarnished gold mining stocks, with the sector ending down 0.7%.

In financials, the “Big Four” banks dropped between 0.8-1.2%.

In New Zealand, the benchmark S&P/NZX 50 index closed little changed at 10,605.98.

Local-listed shares of Westpac Banking Corp and Australia and New Zealand Banking Group were the top drags on the benchmark. (Reporting by Aditya Soni in Bengaluru; editing by Darren Schuettler)

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