Australia Market falls 0.43% on banks, resources stocks

Headline indices of the Australia stock market ended lower on Wednesday, 04 July 2018, reflecting in part mixed fortunes for US and European markets overnight, as traders fretted about the fallout of the intensifying trade frictions between Washington and the rest of the world. Most of ASX issues declined, with shares in consumer discretionary, consumer staples, financials, realty, energy, materials, and industrial issues being notable losers. At the close, the benchmark S&P/ASX 200 Index dropped 26.82 points or 0.43% to 6,183.39. The broader All Ordinaries Index was down 29.14 points or 0.46% to 6,273.68.

The uncertainty over trade policy was still hanging over markets. Many investors fear Washington will go ahead with its plan to impose tariffs on $34 billion worth of Chinese goods on July 6, which Beijing has vowed to match with tariffs on U.S. products, raising the risk of a full-blown trade war. The Trump administration was seen as keeping the U.S.-China tensions alive after late Monday saying it seeks to block China Mobile from operating in the U.S. market. The White House cited national security interests as the reason for refusing China Mobile access to the U.S.

Shares of energy and materials and resources were key drag in the benchmark, after commodity prices took a hit overnight. Base metal prices were mostly lower on the London Metal Exchange (LME) on Tuesday with aluminium and zinc (-1.2%) leading the declines. Copper (-0.6%) fell to 9-month lows on concerns over trade tensions and the spillover to global growth. Among energy stocks, Caltex and Woodside Petroleum was down 1.7% to A$32.47 and 0.5% to A$35.28 respectively.Among Materials, Rio Tinto fell 0.8% to A$80.13 and Mineral Resources 2.7% to A$15.15.

Financials were also down, with top four lenders leading retreat. CBA fell 0.5% to A$73.59, National Australia Bank 1.3% to A$27.38, Westpac fell 0.5% to A$29.25, and ANZ finished 0.07% at A$28.10.

Shares of consumer related issues were lower, after Australian Bureau of Statistics data showed retail sales rose 0.4% on a seasonally-adjusted basis in May, compared to an upwardly-revised 0.5% rise in April. The latest retail sales figures underline the ongoing risks to the Australian economy from a lacklustre consumer, with spending data for May showing shoppers remain relatively cautious as house prices soften and wages remain stubbornly stagnant.

CURRENCY NEWS: The Australian dollar advanced against greenback even though the trade surplus in May was lower than expected. Commodity exports helped deliver a surplus of $827 million for the month, short of a $1.2 billion consensus forecast. Exports rose by 4% in May, while imports increased by 3%. The AUD/USD traded near 0.7385 US cents.

OFFSHORE MARKET: U.S. stocks closed down in abbreviated trading on Tuesday, 03 July 2018, prior to the US July 4 holiday, with losses in the technology and financials sectors outweighed advances in energy, telecoms and real-estate shares. The Dow Jones Industrial Average fell 112 points, or 0.5%, to close at 24,194. The S&P 500 dropped 12 points, or 0.5%, to end at 2,714 while the Nasdaq Composite Index shed 65 points, or 0.9%, to close at 7,502. The US market is closed on Wednesday for Independence Day holiday.

European share markets rose on Tuesday after German Chancellor Angela Merkel agreed a deal with her Bavarian conservative coalition partners. The STOXX600 index rose by 0.8%, the German Dax rose by 0.9% and the UK FTSE index rose 0.6%.

COMMODITY NEWS: Global oil prices rose on Wednesday, after Libya declared a force majeure on some of its crude exports. Traders also debated whether production would restart at Syncrude's 360,000 barrel a day oil sands facility in Canada after it was hit by a power outage. U.S. light crude futures traded up 0.6 percent at $74.62 per barrel, after rising above $75 for the first time in more than three years on Tuesday.International benchmark Brent futures stood flat at $77.77.

Base metal prices were mostly lower on the London Metal Exchange (LME) on Tuesday with aluminium and zinc (-1.2%) leading the declines. Copper (-0.6%) fell to 9-month lows on concerns over trade tensions and the spillover to global growth.

The gold futures price rose by US$11.80 an ounce or 1.0% to $1,253.50 an ounce. The spot goldprice was trading near US$1,253 an ounce in late US trade. Iron orefell by 5 cents or 0.1% to US$63.75 a tonne.

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