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$A falls and share market flatlines

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The Australian dollar is weaker as the first ratings downgrade on China by Moody’s since 1989 renewed concerns about the economic strength of Australia’s key trading partner.

The Australian dollar hit a low of 74.43 US cents after Moody’s downgraded China’s long-term credit rating to A1 from Aa3, reflecting its view that China’s financial strength will weaken in the coming years as economy-wide debt rises and potential growth slows.

Most traders said the downgrade was long overdue, and the local currency recovered some ground to be at 74.59 US cents at 1700 AEST, down from 74.94 US cents on Tuesday.

“We think it will have limited impact on the Australian dollar further out because the report provides nothing significant that investors didn’t know already,” ThinkMarkets senior market analyst Matt Simpson said.

On the share market, the benchmark S&P ASX200 index gained 0.15 per cent, with the miners and major banks lower, but most other sectors stronger.

“We have got some push pull confluences on the market today and that’s pretty much why we are hovering close to the flat line,” OptionsXpress market analyst Ben LeBrun said.

“We also saw softer commodity prices on a resurgent US dollar last night and iron ore futures continuing to track lower.”

Mining giant Rio Tinto dropped 1.3 per cent, BHP Billiton shed 0.6 per cent, Fortescue Metals was down 4.8 per cent and gold miner Newcrest tumbled 3.6 per cent.

Commonwealth Bank managed a gain of 0.1 per cent, while Westpac dropped 0.7 per cent, National Australia Bank shed 0.5 per cent and ANZ was 0.1 per cent weaker.

ON THE ASX:

* At the close, the benchmark S&P/ASX200 was up 8.8 points, or 0.15 per cent, at 5,769 points.

* The broader All Ordinaries index was up 8.7 points, or 0.15 per cent, at 5,811.5 points.

* The June SPI200 futures contract was up 4 points, or 0.07 per cent, at 5,775

* National turnover was 2.1 billion securities traded worth $6.2 billion.

Published on: Wednesday, May 24, 2017

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