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Australia, New Zealand shares hammered in across-the-board selling after Wall Street rout

Reuters logo Reuters 11/10/2018 Aditya Soni
Photo for representation only. © Getty Image Photo for representation only.

A Wall Street rout rippled through Asian markets and pummelled Australian shares on Thursday, with investors selling across the board as rising U.S. interest rates, a bitter Sino-U.S. trade war and worries over global growth sapped confidence.

The benchmark S&P/ASX 200 index (.AXJO) fell as much as 2.3 percent before trimming losses to trade down 1.8 percent or 108.7 points lower at 5,942.3 by 0100 GMT.

Wall Street tumbled on Wednesday, with the S&P 500 and the Dow marking their biggest daily declines since Feb. 8 as markets were spooked by the prospect of rising interest rates. [.N]

The fall was driven by a rise in U.S. long-dated Treasury yields, which reinforced expectations of several interest rate hikes over the next 12 months and prompted investors to reassess equity valuations.

Over the past few months, an intensifying trade war between the United States and China has also hit risk assets on worries about global growth.

Mathan Somasundaram, a market portfolio strategist at Blue Ocean Equities in Sydney, said money is switching out of equities and into bonds for safety.

"Why wait when you can have a good panic and we are having the same panic that we had in February," suggesting some investors are capitalising on growth fears to book profits in equities.

Rising U.S. Treasury yields had triggered a bout of panic selling in equities in February, as investors fretted about the end of easy money policies in the developed world that had boosted equity valuations in the preceding years.

The materials sector - highly exposed to China's slowing economy - were at the centre of a selling barrage, with the metals and mining index (.AXMM) slumping 2.3 percent, the worst affected sector in the benchmark.

Global miner BHP (BHP.AX) fell the most in two-months with a loss of 3.5 percent, while its rival weakened 2.2 percent.

The drop in mining stocks came despite a rise in commodities prices.

Banks were also under pressure, with the financials index (.AXFJ) falling 1.6 percent to a near two-year low.

Shares of top lender Commonwealth Bank of Australia (CBA.AX) were trading 1.5 percent down near a four-month low as its Chief Executive Matt Comyn faced intense questioning from parliamentarians over the banks' governance failures.

Westpac Banking Corp's (WBC.AX) CEO Brian Hartzer is scheduled to appear before the parliamentary inquiry later in the day. The No.2 lender's shares fell as much as 2.3 percent to a near six-year low.

Healthcare stocks were also a drag on the benchmark, with drugmaker CSL Ltd (CSL.AX) tumbling 4.6 percent to its lowest since May 29.

Across the Tasman sea, New Zealand shares saw their worst day in nearly two-years. The benchmark S&P/NZX 50 index (.NZ50) fell 2.6 percent or 235.01 points to 8,815.81.

Consumer staples led the declines, with benchmark heavyweight a2 Milk Company Ltd (ATM.NZ) slumping 6.3 percent to its lowest since Feb. 20.

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