MELBOURNE, Australia--A drop in energy shares led broad weakness in the Australian market Friday after a pullback in oil prices with investors left disappointment that OPEC wasn't more aggressive in cutting crude production.
A fall in iron ore weighed on the materials sector, adding to the market's fall, while banks continued to lose ground.
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Eroding modest gains over the last two days, the S&P/ASX 200 notched its sharpest fall in a week with a decline of 37.9 points, or 0.7%, to finish at 5751.7.
That narrowed the week's gain to 0.4%, after a sharp 1.9% retreat the week before.
Gains in Australian stocks were constrained by ongoing worries about banks, retail stocks and weakness in iron ore prices, said Shane Oliver, head of investment strategy and chief economist at AMP Capital in Sydney.
Oil prices fell further in Asian trading, extending overnight losses after OPEC renewed an agreement to cap output through March 2018, though cuts weren't deepened, as some investors had expected.
Woodside Petroleum, Oil Search and Santos were all down on the day.
Chinese iron-ore futures were also lower in what had been a shaky week for the steel making commodity. Futures sank sharply Wednesday after Moody's downgraded its rating for China, the world's biggest consumer of iron ore.
Diversified miners BHP Billiton and Rio Tinto were 2% and 1.8% lower, respectively, while Fortescue Metals Group sank 4.5%, bringing its fall this week to 7.4%.
Selling of banks extended to a fourth week, as uncertainty lingers about the squeeze that the biggest lenders will feel when a newly announced tax on liabilities that takes effect in July and following a lackluster earnings season.
Australia & New Zealand led the day's fall for the big banks, losing 1.5% and leaving it 14% lower so far in May. Commonwealth Bank of Australia dropped 1.4%, Westpac Banking slipped 0.6% and National Australia Bank was 0.4% lower.
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(END) Dow Jones Newswires
May 26, 2017 03:18 ET (07:18 GMT)