Australia shares drop as vaccine trials halt, stimulus hopes fade

(Reuters) - Australian shares closed lower on Wednesday, with heavy selling in financial and energy stocks, as halted COVID-19 vaccine trials and an elusive U.S. coronavirus relief package dented risk appetite.

FILE PHOTO: Pedestrians are reflected in a window displaying stock prices at the Australian Securities Exchange (ASX) in Sydney, Australia, February 13, 2018. REUTERS/David Gray

The S&P/ASX 200 index .AXJO slipped 0.3% to 6,179.20 at the close of trade. The benchmark closed 1% higher on Tuesday.

Global markets took cue as major indexes on Wall Street closed the previous session in the red, after COVID-19 vaccine trials were paused by Johnson & Johnson JNJ.N due to an unexplained illness in a study participant.

Diminishing hopes for the passage of a U.S. coronavirus relief bill also added to the gloom after House Speaker Nancy Pelosi rejected the $1.8 trillion proposal from the White House.

“It’s (U.S. stimulus) become a fairly politically charged event, and I’m not sure that the Democrats are going to give Mr. Trump a free kick and pass anything stimulus wise for the next 20 days,” said Damian Rooney, director of equity sales at Argonaut.

The heavyweight financial sector .AXFJ stocks finished about 1% lower, with the so-called "Big Four" banks closing in the red.

“Few brokers are starting to look at the banking sector after its big run, so I think there’s a few profit takers there,” Henry Jennings, a senior analyst and portfolio manager at Marcustoday said.

Energy stocks .AXEJ slid 0.9% at close, after oil prices slipped, with Woodside Petroleum WPL.AX easing 1.2% and Oil Search losing 1.7%.

Limiting losses, the healthcare sector .AXHJ advanced 1.3%, with the help of CSL Ltd's CSL.AX 1.4% gain and Sonic Healthcare SHL.AX closing 2.3% firmer.

CSL lifted its FY2021 net profit to be between $2.17 bln and $2.27 bln at constant currency, compared with its initial forecast of $2.10 bln to $2.27 bln

Meanwhile, Sonic Healthcare marked its highest close after reporting first-quarter core earnings of A$580 million, up from A$340 million last year.

In New Zealand, the benchmark S&P/NZX 50 index .NZ50 rose 0.72% to yet another closing high of 12,543.61.

Top gainers were Mainfreight Ltd MFT.NZ, up 5.77%, followed by EBOS Group Ltd EBO.NZ, gaining 3.46%.

Reporting by Nikhil Subba in Bengaluru, Editing by Sherry Jacob-Phillips