Australia Market falls on U.S.-China trade worries

Headline indices of the Australian financial market declined on Tuesday, 29 January 2019, as risk aversion selloff triggered on tracking soft lead from Wall Street overnight, subdued business confidence and on caution before high level U.S.-China trade talks set to start in Washington on Wednesday. Around late afternoon, the benchmark S&P/ASX200 index dropped 35.10 points, or 0.6%, to 5,870.50 points, while the broader All Ordinaries index fell 33.25 points, or 0.56%, to 5,937.80 points.

Chinese President Xi's top economic aide, Vice Premier Liu He, will meet with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Wednesday and Thursday. With high level US-China trade talks set to start in Washington Wednesday, American prosecutors on Monday alleged that Huawei stole trade secrets from an American rival and committed bank fraud by violating sanctions against doing business with Iran.

Shares of technology players declined on tracking fall in US peers American prosecutors filed criminal charges against Huawei Technologies Co., China's largest smartphone maker, and profit warning from Caterpillar a bellwether for U.S. industrial companies and others. Chip company Nvidia also cited deteriorating macroeconomic conditions in China for denting consumer demand as a driver of lower profit and revenue outlook. Nvidia Corp's shed 1.3%. Afterpay Touch Group was down more than 2%.

Shares of major financials declined, with ANZ leading the losses with a 2.4% drop. Commonwealth Bank, NAB, and Westpac were down by between 1.37 and 2.2%, while Macquarie Group was also subdued, dropping 1.1%. Insurer QBE fell 1.9%, IAG dropped 0.4%, while AMP was down another 2.6%.

Healthcare stocks also plummeted, with CSL and Cochlear each losing 2.2% and 0.4%, respectively. Respiratory health specialist ResMed remained 9.7% lower after sleep disorder treatment company disappointed investors with its quarterly results last week and has triggered price target cuts for its shares (12 month targets) from three major brokers.

Shares of energy sector were down as oil dropped about 3% on Monday after an increase in U.S. rigs drilling for oil indicated further growth in supplies while there were still persistent concerns about global demand. Sector heavyweight Woodside Petroleum lost nearly 1% while Santos gave up about 1.6%.

Shares of materials and resources were up after Chinese iron ore futures soared to a 16-month peak on Monday, after a deadly tailings dam collapse led Brazil's mining agency to order Vale SA - the world's biggest iron ore producer - to halt operations at its Corrego do Feijao mine. Mining behemoth BHP Group jumped as much as 2.2% while rival Rio Tinto rose 3.2% and Fortescue Metals rose 5.21%.

Company news: Shares in TPG were up 0.4% after the telco announced it was halting its mobile network rollout because of a ban on using Huawei equipment in 5G.

CURRENCY: Australian Dollar was down against greenback and against a basket of other peers on Tuesday after subdued business confidence. Overall business confidence remained stable in December according to the National Australia Bank's venerable survey, albeit at very low levels. The index reading of 3 matched November's print but that was the lowest since January 2016. the Aussie dollar diving over 20 points to 71.42 US cents.

OFFSHORE MARKET NEWS: US benchmarks fell after Caterpillar and Nvidia blamed slowing global growth for disappointing results, halting a three-day rally for the S&P 500 Index. The Dow Jones Industrial Average dropped 208.98 points (0.84%) to close the session at 24,528.22. The broad-based S&P 500 shed 20.91 points (0.78%) to end at 2,643.85, while the tech-rich Nasdaq Composite Index fell 79.18 points (1.11%) to 7,085.68.

Powered by Capital Market - Live News