Australia Market extends losses trade deal concerns

The Australian share market finished lower for a second consecutive session on Wednesday, 04 December 2019, as the market mood dampened after the Trump administration dashed hopes of a quick preliminary deal to halt impending U.S. tariffs on China. All 12 sectors lost ground, with 10 slumping by more than 1%. At closing bell, the benchmark S&P/ASX200 index tumbled 105.78 points, or 1.58%, to 6,606.51, while the broader All Ordinaries declined 103.99 points, or 1.53%, to 6,714.37.

Risk sentiment dampened as hopes of a possible near-term respite from the market-bruising U.S.-China trade war diminished after comments from President Donald Trump and Commerce Secretary Wilbur Ross. U.S. President Donald Trump on Tuesday suggested a trade deal with China might have to wait until after the U.S. presidential election in November 2020. Separately, Ross confirmed that new tariffs on Chinese imports would take effect on Dec. 15 as scheduled, unless substantial progress was made.

 

Washington and Beijing have been haggling over a phase one trade deal over the past several weeks, an effort seen by many investors as an attempt at a sort-of truce until the globe's two largest economies can agree on a longer-term relationship. Both sides have introduced tariffs on billions of dollars' worth of imports as the disagreement escalated over the last year; additional U.S. tariffs are set to take effect on Dec. 15.

Those remarks, on the heels of France's threatened retaliation over potential new U.S. duties on French products, itself a retaliation against a proposed French "digital tax," suggested that America's hydra-headed tariff war against its major trading partners would continue to dominate markets for the foreseeable future.

The French tax imposes a 3% tax on revenues tech companies generate in France, including targeted advertising and digital marketplaces. In response, the White House on Monday said it could impose duties of up to 100% on $2.4 billion in imports of French champagne, cheese and other luxury goods.

The setback in the Chinese trade negotiations, coupled with tariffs on the French with regard to the digital tax and tariffs on Brazil and Argentina for steel, disappointing the markets.

Financial stocks declined, with Australia and New Zealand Banking Group leading the decline among the "Big Four" lenders, which all finished in the red.

Energy stocks ended in negative territory. Oil and gas major Santos ended 3% lower, while Oil Search finished 1.4% down.

Gold stocks gained, benefiting from higher demand for safe-haven bets and bullion prices. Perseus Mining climbed about 7%, while Gold Road Resources advanced nearly 8% at the end of the session.

CURRENCY NEWS: The Australian dollar, sensitive to shifts in broader risk appetite, declined against greenback, after reports that Aussie economy expanded by a softer than anticipated 0.4% in the September quarter. The Australian dollar changed hands at $0.6823 after slipping from an earlier high of $0.6853.

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