Australia Market falls on profit booking

Headline indices of the Australia share market closed lower on Wednesday, 21 August 2019, as investors locked in profit made recently on tracking weak lead from Wall Street overnight on renewed worries about the global economy and on caution ahead of comments from Federal Reserve Chair Jerome Powell at the end of the week. Meanwhile, selloff pressure mounted on weaker than expected earnings reports from consumer related stocks. At closing bell, the benchmark S&P/ASX200 index dropped 61.69 points, or 0.94%, to 6,483.27. Meanwhile the broader All Ordinaries index, which tracks the nation's 500 biggest listed companies, declined 54.79 points, or 0.83%, to 6,572.57.

U.S. stocks fell broadly on Wall Street on Tuesday after another slide in bond yields and a mixed batch of corporate earnings weighed on the market. The S&P 500 fell 23.14 points, or 0.8%, to 2,900.51. The Dow Jones Industrial Average slid 173.35, or 0.7%, to 25,962.44. The Nasdaq, which is heavily weighted with technology stocks, dropped 54.25, or 0.7%, to 7,948.56.

Market participants are awaiting for release of minutes from the Fed's July policy meeting later in the global day, when the central bank cut rates for the first time in more than a decade, and Federal Reserve Chairman Jerome Powell speech at a central banks meeting in Jackson Hole on Friday to signal that a fed-funds rate cut will be delivered at the central bank's next meeting Sept. 17-18.

Sharers of materials and resources declined, as Chinese iron ore futures fell for a fourth straight session. BHP Group lost 2.9% to close at A$36.25 and Rio Tinto slid 2.5% to A$83.70. Shares in Fortescue Metals slumped 4.1% to A$7.27.

Retail stocks were also among major decliners with Stockland, a2 Milk and Brambles led fall after posting results lower than expectations and flagging softer outlooks. Stockland Corp finished about 7% lower after the residential developer posted an annual net profit decline of nearly 70% and warned about a softer performance for the 2020 fiscal year. Brambles tanked 9.4%% after logistics firm reported a full year 2019 underlying profit of US$804 million (A$1.2 billion), up 2% on a constant currency basis, but down 3% in actual terms.

ECONOMIC NEWS: Australia's six month annualized growth rate in the Westpac- Melbourne Institute Leading Index that indicates likely pace of economic activity, rose to +0.05 percent in July from -0.09 percent in June. The leading index moved above trend since November last year, signaling that the economy is set to grow around trend for the last three or four months of 2019 and well into the first half of next year. An improving housing market, tax cuts and lower rates are likely to boost momentum in the second half of the year to around 2.5 percent annualized, Westpac noted. The leading index growth rate has improved over the last six months to +0.05 percent in July from -0.71 percent in February.

CURRENCY NEWS: The Australian dollar, a liquid proxy for emerging market and China risk, was little changed against greenback on Wednesday. The Australian dollar traded mostly sideways and changed hands at $0.6775.

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