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Australia shares drop as vaccine trials halt, stimulus hopes fade

10/14/2020 | 01:52am

* Johnson & Johnson pauses COVID-19 vaccine trials

* Impasse in U.S. fiscal aid package talks sours sentiment

* Lower oil prices hurt Australian energy stocks

Oct 14 (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.

The S&P/ASX 200 index 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 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 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 slid 0.9% at close, after oil prices slipped, with Woodside Petroleum easing 1.2% and Oil Search losing 1.7%.

Limiting losses, the healthcare sector advanced 1.3%, with the help of CSL Ltd's 1.4% gain and Sonic Healthcare 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 rose 0.72% to yet another closing high of 12,543.61.

Top gainers were Mainfreight Ltd, up 5.77%, followed by EBOS Group Ltd, gaining 3.46%. (Reporting by Nikhil Subba in Bengaluru, Editing by Sherry Jacob-Phillips)

© Reuters 2021
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