The US stock market finished session lower on Tuesday, 08 October 2019, as risk sentiments deteriorated after a fresh flare-up in tensions between Washington and Beijing after the U.S. State Department said it is imposing visa restrictions on Chinese officials for treatment of Muslims in Xinjiang. Market losses were, however, capped on increasing market expectations that the Fed will cut interest rates by a quarter percentage point in October after Federal Reserve Chairman Jerome Powell comments. At closing bell, the Dow Jones Industrial Average retreated 313.98 points, or 1.2%, to 26,164.04, while the S&P 500 index gave up 45.73 points, or 1.6%, to 2,893.06. The Nasdaq Composite Index retreated 132.52 points, or 1.7%, to finish at 7,865.
There is growing pessimism as the Trump administration's latest moves against China raised doubts that U.S.-China trade talks set to begin Thursday will be successful. The U.S. expanded its trade blacklist to include some of China's top artificial intelligence firms on Monday, because of their alleged role in human-rights violations against the Uighur Muslim minority. Also weighing on stocks was a statement by the State Department saying that the U.S. would impose a visa ban on Chinese officials linked to the Muslim abuses.
Market participants remained focused on the resumption of trade talks in Washington D.C. between the U.S. and China with import tariffs set for $250 billion worth of Chinese goods at a rate of 30% from Oct. 15. The world's two largest economies have imposed tariffs on billions of dollars' worth of one another's goods since the start of 2018, battering financial markets and souring business and consumer sentiment.
Market expectations have increased that the Fed will cut interest rates by a quarter percentage point in October after Federal Reserve Chairman Jerome Powell suggested openness to further rate cuts and said the time has come to allow the Fed's asset holdings to begin to expand again. Powell also said the Fed would "soon announce measures to add to the supply of reserves over time."
Shares of the consumer discretionary and energy sectors fell the most in percentage terms. Resource stocks have been a weight on concerns that a slowdown in the global economy will have a drag effect on demand for base metals and oil. Miners South32 (S32) fell 2.4% while Fortescue Metals (FMG) lost 2%. Woodside (WPL) was one of the worst performers in the energy space, easing 1.7%. However, gold stocks advanced on a flight to safety. Saracen Minerals (SAR) and Northern Star (NST) were among the better performers, climbing 4.4% and 2% each.
In company news, Clinuvel Pharmaceuticals (CUV) surged after the US FDA approved its SCENESSE treatment to be used to treat skin sensitivity to sunlight. CUV shares ended the day 60% higher. Cleanaway (CWY) also rose as the waste management firm agreed to buy the recycling assets of SKM Recycling, which was placed in receivership in August, for approx. $66 million. CWY shares ended 6.2% higher. Flight Centre (FLT) had its worst daily decline since April this year, slumping 11.7% on a weaker trading update. FLT is expecting its 1H20 underlying profits to be below that of the year before in tough trading conditions as the travel company had yet to see any tangible benefits from the recent tax refunds and interest rate cuts.
CURRENCY NEWS: The Australian dollar declined against greenback on Wednesday. The Australian dollar, sensitive to shifts in broader risk appetite, changed hands at $0.6741 after seeing an earlier low of $0.6721.
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