ASX200 retreats from record high on mining, big bank sell-off

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The local sharemarket retreated from record highs on Tuesday as investors pulled profits from mining stocks and confronted a stronger-than-expected retail sales print.

The benchmark ASX200 dropped 60.9 points, or 0.74 per cent, to close at 8208.9, while the broader All Ordinaries index fell 56.5 points, or 0.66 per cent, to 8481.9.

Tech stocks lifted 0.62 per cent to 3495.5.

The materials and financials sectors led the sell-off, slumping 2.28 per cent and 1.19 per cent, respectively.

The big miners retreated as investors pulled profits after a sharp and sudden China-backed bull run over the past few days.

BHP fell 2.87 per cent to $44.64 a share, Rio Tinto lost 2.63 per cent to $125.74 and Fortescue tumbled 3.48 per cent to $19.96.

The materials sector soared 11 per cent across September as iron ore and coal producers welcomed fresh stimulus measures out of China, but IG markets analyst Tony Sycamore warned a pullback was on the cards.

“Although the People’s Bank of China has confirmed the monetary easing measures unveiled last Tuesday, other stimulus initiatives reported in the media, such as bank recapitalisation plans and government bond issuance, are still awaiting official confirmation,” he said.

The ASX200 fell 0.74 per cent on Tuesday. NewsWire / Gaye Gerard Credit: News Corp Australia

“Until those details are fully disclosed, markets tied to the Chinese economy, like the Hang Seng, up nearly 25 per cent in the past week, and our own ASX200, are at risk of a deeper pullback.”

The ABS reported on Tuesday retail sales grew 0.7 per cent for August, beating expectations of a 0.4 per cent rise.

Betashares chief economist David Bassanese said the print “kills any hope” the Reserve Bank of Australia would rush to cut interest rates and bank and consumer stocks slumped on the news.

Commonwealth Bank fell 1.51 per cent to $133.34, NAB slipped 0.59 per cent to $37.13, ANZ lost 1.08 per cent to $30.15 and Westpac declined 1.67 per cent to $31.19.

Myer lost 0.6 per cent to 82c and Harvey Norman fell 0.61 per cent to $4.92.

“Good news is bad news in a way if you look at that retail sales number,” Mr Bassanese said.

“The question is to what expect these tax cuts will be saved or spent.

“The July number was pretty weak but this one has bounced back. It’s a strong number, but these numbers can be a bit volatile.”

Tuesday’s retreat came despite a positive lead from Wall St overnight on Monday, with the Dow Jones gaining 17 points to 42,330, the S and P 500 lifting 0.42 per cent to 5762 and the tech-heavy Nasdaq rising 0.38 per cent to 18,189.

In corporate news, digital property giant REA Group jumped 4.88 per cent to $210.80 after withdrawing its $12bn acquisition play for British firm Rightmove.

Star Entertainment’s new Queen’s Wharf precinct in Brisbane. The troubled gaming company was the worst performing stock on the ASX200 on Tuesday. NewsWire / Glenn Campbell Credit: News Corp Australia

“Against a backdrop of intensifying global competition, we approached Rightmove’s Board because we strongly believed in the opportunity to create a globally diversified leader in the digital property sector that would benefit both REA and Rightmove shareholders,” REA CEO Owen Wilson said.

“We were disappointed with the limited engagement from Rightmove that impeded our ability to make a firm offer within the timetable available.

“They had nothing to lose by engaging with us.”

The top gainer on the ASX200 was Sigma Healthcare, which soared 23 per cent to $1.76 after it proposed three court-enforceable undertakings to the ACCC to support its proposed takeover of Chemist Warehouse.

The largest laggard was troubled casino company Star Entertainment, which slumped 6.78 per cent to 28c.

The Aussie dollar gained 0.2 per cent to buy US69.2c at the closing bell.

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