Australia Stocks end softer on recession fears

Headline indices of the Australia share market closed lower after swinging between gains and losses on Friday, 16 August 2019, as a sign of looming recession as well as concerns over the U.S.-China trade front and the worrying inversion of the U.S. bond yield curve offset the boost from buying back issues oversold a day earlier. At closing bell, the benchmark S&P/ASX200 index declined 2.59 points, or 0.04%, to 6,405.50. Meanwhile the broader All Ordinaries index, which tracks the nation's 500 biggest listed companies, fell 4.87 points, or 0.08%, to 6,485.90.

The Australian stock market extended losses on Friday after suffering its worst day on Thursday in almost 18 months after A$63 billion was wiped off the value of shares amid mounting fears of a global recession, an escalation in Sino-U.S. trade tensions and the worrying inversion of the U.S. bond yield curve.

Investors continue monitoring developments on the U.S.-China trade front. US-China trade tensions have metastasised into something more sinister by affecting global growth to such a large degree that bond markets are pricing-in a high probability of a worldwide recession.

US President Donald Trump said on Thursday he believed China wanted to make a trade deal and that the dispute would be fairly short. China has promised to retaliate against the United States if Washington imposes additional tariffs on its products on September 1. A brief statement released by the State Council's customs tariff commission on Thursday said China would have no alternative but to take countermeasures. It said the threat to impose 10 per cent tariffs on US$300 billion of Chinese imports ran against the consensus reached by US President Donald Trump and his Chinese counterpart Xi Jinping when they met in Japan in late June. The warning came after Trump appeared to link the outlook for trade talks with China to a resolution of the Hong Kong protests and suggested another meeting with Xi.

Financials were mostly higher, with three of the country's Big Four banks - Commonwealth Bank of Australia, Westpac Banking Corp and National Australia Bank - advanced 0.4% to 0.7%. Australia and New Zealand Banking Group were softer, as the no. 4 lender reported a rise in impaired assets in the third quarter but said loan applications rose as it eased lending norms.

Consumer-focused companies such as Woolworths and Wesfarmers gained 1.3% and 0.8%, respectively.

Australian miners, which tend to be hit hard by trade uncertainty, were mixed, with heavyweights BHP Group and Rio Tinto both weaker.

CURRENCY NEWS: The Australian dollar, a liquid proxy for emerging market and China risk, was firmer against greenback on Friday. The Australian dollar changed hands at $0.6789 after rising from levels around $0.675 in the previous session.

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