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Australia shares turn red as court ruling triggers political uncertainty
October 27, 2017 / 6:13 AM / a month ago

Australia shares turn red as court ruling triggers political uncertainty

(Updates to close)

By Hanna Paul

Oct 27 (Reuters) - Australian shares fell on Friday, swinging into negative territory from a near six-month peak after the conservative government lost its one-seat majority following a shock court ruling removed the deputy prime minister from parliament.

The bourse saw its steepest one-day percentage decline in over five weeks after the country’s high court ruled that Deputy Prime Minister Barnaby Joyce was ineligible to remain in parliament due his dual citizenship. The decision has forced a by-election for the Joyce’s constituency and leaves Prime Minister Malcolm Turnbull’s government temporarily vulnerable to votes of no confidence.

The S&P/ASX 200 index fell 0.2 percent or 13.097 points to 5,903.2 at the close of trade, shedding earlier gains from encouraging corporate results. The benchmark rose 0.2 percent on Thursday.

“The idea of political instability in Australia is causing a little bit of market angst. No one wants to see that,” said Chris Weston, an institutional dealer with IG Markets.

“The problem is, when you have a market that’s had a really good run, people are prone to react probably more aggressively,” Weston said.

The index ended lower after three straight days of closing gains and posted its first weekly decline in four weeks.

The bourse was painted red by financial stocks, led by the “Big Four” banks, which dropped 0.8 percent to 1.2 percent.

Weston said the emerging prospect of the opposition Labor party forming government has significant implications for markets.

“They have promised to remove negative gearing in certain circumstances and that could be a headwind for the housing market and if the housing market is facing headwinds, that’s going to be bad for financials,” Weston said. Despite this, Macquarie Group remained at an all-time high after reporting its best first half profit, a surge that had bolstered the wider market earlier in the session.

Energy stocks remained upbeat with Origin Energy in the forefront, closing about 1.5 percent firmer.

Qantas Airways ended 5.6 percent weaker, a day after it warned that its domestic earnings would take a beating in 2018.

New Zealand’s benchmark S&P/NZX 50 index was flat, inching 1.75 points lower to finish the session at 8,084.99.

Gains in consumer stocks offset declines in the material sector. Fletcher Building ended 2.4 percent weaker, among the top drags on the benchmark.

In New Zealand, newly-sworn in Prime Minister Jacinda Ardern said she would seek to renegotiate the Trans-Pacific Partnership agreement in Vietnam in two weeks’ time to include the housing investment measure. (Reporting by Hanna Paul; Editing by Sam Holmes)

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