Australia Market extends falls on soft offshore cues

Headline indices of the Australian share market were lower on Tuesday, 20 November 2018, as risk sentiments weighed by tracking negative cues from Wall Street overnight, amid lingering concerns about the outlook for the global economy along with uncertainty about the potential for a trade deal between the U.S. and China. Meanwhile stocks were also lower after leaders of the Asia-Pacific Economic Cooperation (APEC) group were unsuccessful to agree on a communique for first time in APEC history. Most of ASX issues declined, with tech and miners stocks among the major decliners. In late afternoon trades, the benchmark S&P/ASX200 index dropped 31.46 points, or 0.55%, to 5,662.20 points points, while the broader All Ordinaries index declined 35.69 points, or 0.62%, to 5,750.70 points. Pointing out the obvious, benchmark S&P/ASX200 index is just 62 points away from the pyschological barrier of 5600, which the ASX last saw in December 2016.

Shares of technology issue declined after tech giant Apple's shares fell overnight on reports that the company slashed production orders for all three of the iPhone models that were unveiled in September. Altium lost more than 7%, while Afterpay Touch Group declined more than 4% and Computershare was down more than 2%.

 

Shares of major miners were mostly lower despite stronger metals prices. BHP gained 0.4%, while Fortescue Metals was lower by 0.4% and Rio Tinto was down 0.1%.

Shares of energy companies declined despite an increase in crude oil prices. WTI crude for January added $0.52 or 0.9% to close at $57.20 a barrel on the New York Mercantile Exchange. Sector heavyweight Woodside Petroleum dipped 0.1%, meanwhile Oil Search and Santos were lower in a range of 0.4% to 1%.

Shares of banks and financials were lower. In the banking sector, ANZ Banking, Commonwealth Bank, National Australia Bank and Westpac were lower in a range of 0.4% to 0.8%.

Among individual stocks, A2 Milk Co shares rose 2% after dairy and infant formula producer reported a 65% surge in profit for the first four months of fiscal 2019, while revenues grew more than 40%.

Zip Co (Z1P) shares rose almost 3% after payment services business has signed an agreement with hardware chain Bunnings with the service available throughout the Bunnings Australian network by early December.

Fletcher Building (FBU) shares declined 9% as the building products maker expects HY19 earnings (EBIT) before significant items to be down 10% on the same time last year, due partly to challenging trading conditions in the Australian housing market.

On the economic front, members of the Reserve Bank of Australia's monetary policy board said that the country's economy has continued to pick up steam, and at a slightly faster rate than expected, indicating a chance of a further drop in unemployment rates in the near term, minutes from the central bank's November 6 meeting revealed. The appreciating U.S. dollar and its effect on the Australian currency have helped to boost domestic growth, the minutes said. They added that the inflation rate remained low and stable beneath the midpoint of the target range, as expected. Minutes of the meeting revealed an expected above-trend growth over the next two years, fuelled by record low interest rates of 1.5%. Growth is seen averaging 3.5% this year and next year, while slowing around 3% in 2020. Wages and inflation are predicted to rise gradually.

CURRENCY: Australian Dollar was down against greenback and other major currencies on Tuesday, as demand for commodity linked unit dimmed amid lingering concerns about the outlook for the global economy along with uncertainty about the potential for a trade deal between the U.S. and China. The Australian dollar was quoted at $0.7296, up from $0.7306 on Monday.

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