Australia Market rises 0.44%

Headline indices of the Australia share market modest higher on Wednesday, 28 August 2019, as risk sentiments boosted up by China's stimulus announcement, with materials and resource stocks being notable gainers, offsetting weakness in financials after deepening US debt yield curve inversion clouds the margin outlook for banks. At closing bell, the benchmark S&P/ASX200 index inclined 28.28 points, or 0.44%, to 6,499.50, while the broader All Ordinaries added 33.38 points, or 0.51%, to 6,599.

On Tuesday, China announced measures aimed at raising consumption, including a potential removal of restrictions on car purchases. A trade dispute between the United States and China is now in its second year and is placing increasing strain on the global economy, forcing policy makers to respond with interest rate cuts and stimulus measures to bolster growth.

 

Trump's flip-flops on trade have left investors second-guessing the next moves as optimism of a resolution become more remote. The U.S. president's apparent de-escalation of trade tensions at the Group-of-Seven meetings had helped ease investor nerves somewhat before Beijing questioned some of those comments. Investors are also focused on latest round of tariffs from both sides are due to be staggered from Sept. 1. The first stage of US tariffs on $300 billion worth of Chinese goods is scheduled to go into effect. In response, China has unveiled tariffs on US products set to go into effect the same day.

Shares of materials and energy companies gained. Mining titans BHP Group and Rio Tinto gained 1.3% and 2%, respectively. Oil and gas firm Woodside Petroleum rose 1.4%.

Shares of banks and financials, on concerns deepening US debt yield curve inversion clouds the margin outlook for banks. The "Big Four" banks lost between 0.4% and 1.2%. Australian wealth manager AMP sunk 3.3%, after Ratings agency S&P Global on Tuesday downgraded its credit worthiness by one notch. Meanwhile, Macquarie Group (MQG) was in a trading halt as it looks to raise up to A$1 billion via an institutional placement to invest in new opportunities.

Telstra (TLS) was down 2.7% as it trades ex-dividend today. Bellamy's Australia shares fell 2.4% after infant formula maker reported a near 50% plunge in annual profit, hurt by regulatory changes in China and competition.

CURRENCY NEWS: The Australian dollar continued to fall against greenback on Wednesday. The Australian dollar was at $0.6738 after slipping from levels above $0.676 in the previous session.

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