January 13, 2020 / 2:06 AM / 13 days ago

Australian shares slip as U.S.-Iran conflict, bushfires curb risk appetite

* Growth will be further weakened by the bushfires - analyst

* Iron ore prices weigh on miners

* CSL poised to end 4-day winning streak

By Shriya Ramakrishnan

Jan 13 (Reuters) - Australian shares on Monday retreated from record highs scaled in the previous session, as investors were cautious about longer-term risks of Middle East conflict, while the impact of deadly bushfires across the country also darkened the mood.

The United States imposed additional sanctions on Iran as a result of its missile attack on U.S. troops in Iraq this week, and Washington rebuffed an Iraqi request to pull out its troops.

As of 0114 GMT, the S&P/ASX 200 index was down 0.4% at 6,901.2. The benchmark ended 0.8% firmer on Friday.

“Against a background of significant unrest in the Middle East and the aftermath of the ongoing bushfire disaster at home, the market is hoisting up the white flag today,” James McGlew, executive director of corporate stockbroking at Argonaut said.

Raging fires on the continent’s east coast has already killed 27 people and scorched more than 10.3 million hectares of land so far, with foreign exchange investors increasingly betting that the bushfires will hurt the country’s economy.

Mounting economic costs due to the crisis have stoked expectations of an interest rate cut by the central bank, and could weigh on lenders whose margins have already come under pressure due to record low rates.

Heavyweight financial stocks dipped 0.2%, with Westpac Banking Corp and Australia and New Zealand Banking Group down 0.1% each.

Mining stocks fell 0.4%, dented by lower iron ore prices.

BHP Group, the country’s largest firm by market value, dropped as much as 0.7%, while global miner Rio Tinto dipped 0.5%.

Investor focus is also expected to shift towards the signing of a Phase 1 trade deal between China and the United States, scheduled for Wednesday. Mining stocks stand to highly benefit from any reprieve from Sino-U.S. trade tensions, with China being a key buyer of Australian commodities.

Energy stocks were also in the red, weighed down by weakness in global crude prices. Woodside Petroleum, which is due to report its fourth-quarter production results on Thursday traded 1.4% lower, while Santos Ltd fell 0.9%.

Healthcare stocks also posted steep declines, with Cochlear Ltd down 0.4%, while CSL Ltd, the country’s most expensive stock, was poised to end a four-day winning streak.

“Any stock that has booked the gains that CSL have delivered over the last couple of years will have increased volatility in its price. The feeling is that the $300 mark will be breached soon ...” McGlew added.

New Zealand’s benchmark S&P/NZX 50 index dipped 0.1% to 11,542.56.

Specialist outdoor retailer Kathmandu Holdings Ltd and Goodman Property Trust were among the top drags on the benchmark, falling more than 1% each.

Reporting by Shriya Ramakrishnan in Bengaluru, Editing by Sherry Jacob-Phillips

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