Australia Market fall on profit taking

The Australian share market finished session lower on Wednesday, 05 August 2020, as investors opted to take profits following the market's yesterday gains, and as fresh coronavirus-related restrictions fanned fears of further economic damage. However, market losses were limited by a rally in gold stocks after the precious metal surged to a record high.

At closing bell, the benchmark S&P/ASX200 index declined 36.26 points, or 0.6%, to 6,001.30. The broader All Ordinaries was down 30.60 points, or 0.5%, to 6,135.88.

Investors stayed away from risky bets as spike in domestic Covid-19 cases continued to bruise risk sentiment. Australia's Queensland state said it would seal off its border with New South Wales and capital Canberra to hold back a second wave of coronavirus cases. Australia's second-most populous state Victoria has reported a record rise in fresh Covid-19 cases and deaths on Wednesday, and enforced stringent movement controls and ordered the closure of large parts of the local economy in a bid to contain an alarming resurgence in coronavirus cases.

 

Adding to the market's uncertainty, leading economies US and China said they would review the implementation of their Phase 1 trade deal in a video-conference on Aug. 15.

Heavyweight financials were the biggest laggards in the benchmark, with top lenders Commonwealth Bank of Australia and Westpac Banking Corp dropping 2.6% and 3.1%, respectively.

Industrial stocks were also down, dragged by losses among the likes of Transurban Group and Sydney Airport Holdings, down 1.4% and 2.3%.

Bucking the tepid trend, gold stocks surged, as prices of the underlying yellow metal scaled an all-time peak, helped by bets for more stimulus measures against the pandemic-ravaged global economy.

ECONOMIC NEWS: Australia AiG Construction PMI Indicates Improvement In July -- Australia construction sector improved in July, although the sector continues to stay in contraction with a Performance of Construction Index score of 42.7, the latest survey from the Australian Industry Group showed on Wednesday. That's up from 35.5, although it remains beneath the boom-or-bust line of 50 that separates expansion from contraction. Activity and new order indices improved in three of the four sectors included in index in July but they remained negative for all sectors. Apartment building dropped further in July, with respondents noting little prospect of a recovery in demand from international and local investors in the near term.

CURRENCY NEWS: The Australian dollar changed hands at $0.7186 following its bounce from levels below $0.71 earlier this week.

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