Australia Market falls on profit booking

Headline indices of the Australian financial market were lower on Tuesday, 26 February 2019, as investor elected to book profit after a rush of trade optimism on U.S.-China trade talks from early Monday faded. Most of ASX sectors declined, with shares in with tech, materials, and energy issues leading losses. Around late afternoon, the benchmark S&P/ASX200 index dropped 78.52 points, or 1.27%, at 6,107.80 points, while the broader All Ordinaries declined 74.07 points, or 1.18%, at 6,189.50.

Market paring its yesterday advance as U.S. President Donald Trump said on Monday he was optimistic that a final trade deal could be reached with China and that he would hold a summit to sign any pact, but cautioned that an agreement may still not happen.

 

Traders are awaiting for signs on the progress on trade expressed by the world's two biggest economies that has been tested by protectionism and forecasts of slowing global economic growth. Also in focus will be a hearing from Federal Reserve Chairman Jerome Powell, where investors will get the latest read on monetary policy.

Shares of major materials and resources were down on profit booking after yesterday's gain on the back of Trump statement on Sunday that he would delay a tariff hike on $200 billion of Chinese imports planned for March 1 after productive trade talks. The delay in a tariff hike was the clearest signs yet that both sides were making progress in the talks, but Trump on Monday also sounded a note of caution, saying a deal could happen fairly soon, or it might not happen at all. Global miner BHP Group and rival Rio Tinto shed 1.5% and 1.2%, respectively. Alumina fell as much as 8.8%, as the stock trades ex-dividend.

Energy stocks declined, as crude oil prices fell 3% on Monday after U.S. President Donald Trump called on OPEC to ease its efforts to boost crude prices, which he said were getting too high. Santos Ltd and WorleyParsons dropped 2.6% and 3%, respectively, with both stocks trading ex-dividend.

Tech shares declined, with Afterpay leading losses, down as much as 8% after announcing a net first-half loss of $22.2 million on higher employment expenses and expansion in the US and UK.

The banking sector was under pressure, with big four banks ANZ, Commonwealth, NAB and Westpac were down between 0.08% and 0.81%.

In company news, Slater & Gordon (SGH) shares were under pressure, plunging 14.2%, after the law firm reported A$10.3 million firsthalf loss. Total revenue and other income from continuing operations fell 12% to A$75.1 million, as stronger class action revenues were offset by lower income from its personal injury business.

Estia Health (EHE) shares declined 2.1% after the aged care provider downgraded its full-year guidance. EHE reported a 4.1% lift in first half profit to A$21.1 million, while revenue rose 6.6% to A$289.7 million. The company will pay an interim dividend of 8 cents per share, fully franked. EHE is now expecting FY19 earnings growth in the low-to-mid single digits, down from its prior forecast of midsingle digit growth - subject to no further material changes in market or regulatory conditions.

CURRENCY: The Australian dollar rose against the U.S. dollar on Tuesday. The Aussie currency was quoted 71.64 US cents from 71.48 US cents on Monday.

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