Australia Stocks Drop as G-20 Statement Stokes Fears of Trade Barriers
By David Winning
SYDNEY--Australian shares fell Monday, reflecting widespread skittishness of the possible impact that trade barriers could play in putting a brake on global growth.
The S&P/ASX 200 index closed down 0.4%, or 20.7 points, at 5778.9 as investors responded to the Group of 20 communique over the weekend that replaced a pledge to avoid all forms of protectionism with a commitment to work toward strengthening the contribution of trade to economies.
Economists at Australia & New Zealand Banking Group said deleting the language on protectionism signaled that anything is now possible as the trade rule book gets rewritten.
A streamlined global supply chain and the lowering of barriers have been a key driver of productivity growth and earnings. "You can't have the antithesis and expect the productivity and earnings story not to be dented," ANZ said.
Fletcher Building slumped 10% to 7.51 Australian dollars (US$5.80) on a warning that management now expects its construction unit to be unprofitable in the 2017 fiscal year. Problems at the construction division are forecast by Fletcher to drag down annual earnings before interest and tax to 610 million-650 million New Zealand dollars (US$430 million-US$458 million), compared with prior guidance for NZ$720 million-NZ$760 million.
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