Australia Market falls on profit booking,COVID-19-driven lockdown

The Australian share market finished session lower on Friday, 07 August 2020, as profit taking triggered amid fears of fears of further unemployment and financial damage after strict COVID-19-driven lockdown in the country's second-largest city Melbourne. Meanwhile, the central bank downgrade of its outlook for the national economy and rising tensions between the US & China after U.S. ban on transactions with China's ByteDance's TikTok and Tencent-owned WeChat also dented sentiments.

At closing bell, the benchmark S&P/ASX200 index declined 37.35 points, or 0.62%, to 6,004.84. The broader All Ordinaries was down 35.35 points, or 0.57%, to 6,144.92.

The state of Victoria has recorded a sharp resurgence in coronavirus cases, prompting harsh movement restrictions even as policymakers attempt to support the economy through stimulus and wage subsidies.

 

The Reserve Bank of Australia said in its monetary policy statement released Friday that the pace of recovery of the Australian economy is expected to be slower than previously forecast. Generalised uncertainty and deficiency in demand have turned out to be more of a drag on growth than previously thought, the Australian central bank said, acknowledging that recent measures taken to address the coronavirus spread in the state of Victoria will further delay the recovery.

The Trump administration unveiled bans on U.S. transactions with ByteDance's TikTok and Tencent-owned WeChat, stoking fears that a "silicon curtain" is emerging between the two superpowers.

Although most sectors were lower, leading declines were the materials and healthcare sectors. Miners weighed most even as commodity prices remain at elevated levels. Gold prices continued to hit all-time highs, holding around US$2,070 /oz overnight while iron ore was at 12-month highs. BHP Group (BHP) fell 1.3% while Rio Tinto (RIO) lost 2.9%. Gold miners also eased with Northern Star (NST) down 2.4% and Silver Lake (SLR) eased 3.1%.

The big four banks ended mixed. National Bank (NAB) underperformed its peers, ending lower by 0.4% while ANZ Bank (ANZ) lifted 0.25%. One of the financials with the largest percentage change was Australian Ethical Fund (AEF), which dropped 15% after IOOF Holdings (IFL) sold 72% of its 19.7 million shares in the company for a total consideration of A$74.5 million.

Insurance Australia Group (IAG) declined 0.8% with the insurer releasing FY20 profit results today. Insurance premiums rose slightly to $12.1 billion but net profit after tax (NPAT) slumped 59.6% to A$435 million, mostly on higher natural peril claims and COVID-19 claim costs.

CURRENCY NEWS: The Australian dollar changed hands at $0.7211 following the RBA's monetary policy statement release, having seen an earlier high of $0.7243.

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