Australia Market falls amid US-China trade tensions

The Australian share market fell sharply on Wednesday, 08 May 2019, as risk aversion selloff triggered on tracking pullback in Wall Street overnight as financial markets grappled with the risk of an all-out trade war between China and the United States. Most of ASX sectors declined, with information technology, consumer staples, and energy issues being notable losers. At closing bell, the benchmark S&P/ASX200 index fell 26.53 points, or 0.42%, at 6,269.15 points, while the broader All Ordinaries dropped 31.73 points, or 0.5%, at 6,351.76.

In the US, The Dow, S&P 500, and Nasdaq all finished the day solidly in the red, adding to their losses from Monday. The Dow fell about 473 points, marking the second-worst trading day of the year. The S&P 500 was down 1.7% and the Nasdaq fell 2%. European stocks fared poorly too. The FTSE 100, DAX, and CAC 40 all closed 1.6% lower. The pan-European Stoxx 600 fell 1.4%.

Global stocks were ailing after President Donald Trump Sunday threatened further tariffs on Chinese imports that could come into effect on Friday, throwing global markets into disarray. His administration doubled down on that threat Monday evening. Investors previously expected Beijing and Washington to be close to sorting out a trade deal after months of negotiations. A lack of an agreement between the world's two largest economies could stymie global growth. Technology and industrial companies have been hit the hardest by the selloff, because their businesses inherently rely on the global trade of materials and finished goods.

China isn't the only place with which Trump wants to change trade relations. The United States has other trade-related issues on its plate: The European auto industry is also on his list and could get hit with tariffs. The US-driven replacement for NAFTA, called USMCA, took more than a year to negotiate but is not yet ratified. In short, uncertainty is back.

Speaking to reporters on Monday, US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin said China reneged on previous agreements over the weekend, undermining progress towards a detailed trade agreement between the world's two largest economies. Lighthizer, the top US trade negotiator, said the administration would increase penalties on $200 billion of Chinese goods to 25% from 10% on Friday. Trump renewed his threat to raise tariffs on Sunday.

Shares of CSR closed down 1.3% after the building products maker posted a 14% slide in annual profit to $181.7m. The slowing property market and higher electricity costs held back its aluminium division. CSR has decided to reduce its dividend by 0.5c to 13c per share.

Treasury Wine Estates (TWE) was down 5.5% on news the company's CEO has sold close to A$7m in his TWE shares in recent weeks.

TPG shares closed 13.5% lower at A$6.07 after news broke of the ACCC's decision to block TPG merger with Vodafone Hutchison Australia. Telstra closed 2.08% lower at $3.29.

CURRENCY: The Australian dollar declined against the U.S. dollar on Wednesday. The Australian dollar was quoted at 70.23 US cents, from 70.35 US cents on Tuesday.

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