ASX slips after debt fears prompt Wall Street sell-off

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ASX slips after debt fears prompt Wall Street sell-off

The *********** share market is trading lower after concerns about US sovereign debt prompted a Wall Street sell-off overnight.

The S&P/ASX200 fell 42.6 points, or 0.51 per cent by midday, to 8,344.2, while the broader All Ordinaries lost 42.6 points, or 0.49 per cent, to 8.569.5.

The local bourse pared some losses after slipping 0.9 per cent in early trade.

Major US indexes the S&P500 (-1.61 per cent), the Dow Jones (-1.91 per cent) and the tech-heavy Nasdaq (1.41 per cent) all fell, after a weak US Treasury auction pushed bond yields higher and weighed on US equities and the greenback.

The United States’ spiralling debt has been in focus this week after a third sovereign credit downgrade and as US President Donald Trump attempts to pass a tax bill that would raise the US debt ceiling.

“US stocks fell sharply overnight as the rumblings grew louder in the increasingly cranky bond market,” IG Markets analyst Tony Sycamore said.

“A disappointing $US16 billion auction of 20-year Treasuries, the first since Moody’s downgrade, led to a surge in US yields.”

Only two local sectors were trading higher by lunchtime, with energy stocks down 1.4 per cent and leading losses as oil prices ticked lower.

Financials fell 0.7 per cent as the Commonwealth Bank retreated 1.5 per cent after hitting a new peak of $176.46 on Wednesday.

ANZ was the only big four bank trading higher, up 0.4 per cent, as NAB fell 1.3 per cent and Westpac slipped 0.3 per cent.

Gold pusher 0.6 per cent higher to $US3,340 ($A5,195) as risk-off sentiment pushed investors toward the safe haven.

Materials stocks grinded 0.2 per cent higher thanks to gold miners and explorers, as large cap miners BHP, Rio TInto and Fortescue all lost ground.

The world’s largest cryptocurrency Bitcoin rallied to an all-time high above $US110,700 ($A171,780), thanks in part to a stablecoin (fiat currency-pegged token) bill making its way through US congress.

Bitcoin’s divergence from risk assets, particularly US tech stocks is being closely watched for signs it behaves more like a genuine store of value or hedge to fiat currency, Capital.com market analyst Kyle Rodda said.

Telecommunications services was one of three sectors to gain ground, up 0.1 per cent as Telstra pushed 0.5 per cent higher to $4.72.

A strong mobile performance from competitor Optus helped it carve out a 55 per cent increase in earnings before interest and tax for the year to March 31, along with 238,000 new customers.

Shares in Optus’ Singapore-listed owner Singtel were up 2.3 per cent as the group’s total underlying profit rose 9 per cent.

Insurance Australia Group rallied more than two per cent to $8.76 after the *********** Competition and Consumer Commission rubber stamped its takeover of RACQ Insurance.

Suncorp and QBE also pushed one per cent higher, the insurers helping to soften losses in the financial services sector.

The *********** dollar is buying 64.29 US cents down from 64.52 US cents at Wednesday’s ASX close.

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