Australia Market falls 0.3%

The Australia stock market declined on last trading session of the week and month, Friday, 31 August 2018, on following soft lead from Wall Street overnight after reports that President Donald Trump was said to move ahead with a plan to impose new tariffs on China as soon as next week. Weak iron ore and gold prices also weighed on mining stocks. Most of ASX sectors declined, with shares in telco, materials, consumer staples, and realty issues being notable losers. In late afternoon trade, the benchmark S&P/ASX 200 Index fell 20.46 points, or 0.32%, to 6,331.30. The broader All Ordinaries Index dropped 21.43 points, or 0.33%, to 6,439.10.

China kept its tariff dispute with the United States infocus as its commerce ministry insisted negotiations must be based on "equality," with Washington's proposed tariffs on an additional $200 billion worth of Chinese goods, which will come into effect next month after a public comment period ends on Wednesday, Sept. 5.

 

Shares of telecom sector declined, with TPG Telecom and Hutchison fell back 4.8% and 5.6% respectively, after strong gains the previous day on news of their A$15 billion merger of equals in an effort to become a stronger challenger to bigger rivals Telstra and Optus. Telstra fell 4%.

Shares of materials and resources declined after base metal prices fell as the Sino-U.S. trade tensions upstaged optimism that the United States and Canada could clinch a new North American Free Trade Agreement (NAFTA). BHP Billiton and Rio Tinto were down more than 1% each. Gold miners were weak after gold prices extended losses to a third straight session overnight, with Newcrest Mining was declining more than 1% and Evolution Mining was losing almost 2%.

Consumer-related stocks were also a drag on the market, with Harvey Norman shares falling about 5% after the furniture and electrical goods retailer posted a 16.4% drop in full-year profit due to property revaluations and a disastrous dairy farming investment. Harvey Norman also announced an A$163 million entitlement offer at a significant discount to Thursday's closing price as it aims to pay down debt.

Financial stocks inclined, with Westpac, Commonwealth, National Australia Bank and ANZ Banking were higher in a range of 0.1% to 0.5%.

Energy stocks inclined after crude oil prices rose to a seven-week high overnight. WTI crude oil futures for October delivery added $0.74 or 1.1% to close at $70.25 a barrel on the New York Mercantile Exchange. In the energy space, Santos, Oil Search, and Woodside Petroleum were higher in a range of 0.2% to 1%.

Among individual stocks, Shares in Transurban were in a trading halt after the toll road operator said it has won a bid for Sydney's WestConnex motorway and a consortium led by the company has agreed to pay the NSW government A$9.3 billion for a 51% stake in the new WestConnex motorway. The toll road giant said it will fund its 50% of the deal through a $4.2 billion entitlement offer and A$600 million placement to consortium partners AustralianSuper and Abu Dhabi-controlled Tawreed Investments.

CURRENCY NEWS: The Australian dollar was lower against the U.S. dollar on Thursday. The Australian dollar was buying 72.59 US cents, down 0.6% from 72.88 US cents on Thursday.

OFFSHORE MARKET NEWS, US stock market closed down on Thursday on concerns about the U.S.-China trade war, upstaged optimism that the United States and Canada could clinch a new North American Free Trade Agreement (NAFTA). The Dow Jones Industrial Average slid 137.65 points or 0.5% to 25,986.92, the Nasdaq fell 21.32 points or 0.3% to 8,088.36 and the S&P 500 dropped 12.91 points or 0.4% to 2,901.13.

The major European stock markets ended lower on Thursday. The U.K.'s FTSE 100 Index fell by 0.6%. The German DAX Index and the French CAC 40 Index dropped by 0.5% and 0.4%, respectively.

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