Australia Market tumbles on global sell-off

Headline indices of the Australia market stumbled on Thursday, 11 October 2018, as risk aversion selloff triggered on tracking negative lead from Wall Street overnight which fell amid fear of rising U.S. interest rates, ongoing trade friction between the U.S. and China, and worries over global growth. All ASX issues declined, with shares in technology, materials, energy, consumer discretionary, and financials being notable losers. Around late afternoon, the benchmark S&P/ASX200 index tumbled 139.81 points, or 2.31%, at 5,910 points, while the broader All Ordinaries index dropped 145.18 points, or 2.36%, to 6,018.60 points.

Wall Street tumbled on Wednesday, with the S&P 500 and the Dow marking their biggest daily declines since Feb. 8 as markets were spooked by the prospect of rising interest rates. The fall was driven by a rise in U.S. long-dated Treasury yields, which reinforced expectations of several interest rate hikes over the next 12 months and prompted investors to reassess equity valuations. Over the past few months, an intensifying trade war between the United States and China has also hit risk assets on worries about global growth.

 

Shares of energy players were down after crude oil prices fell more than 2% overnight. WTI crude for November delivery tumbled $1.79 or 2.4% to $73.17 a barrel on the New York Mercantile Exchange. Woodside Petroleum, Oil Search, and Santos fell in a range of 2% to 4%.

Shares of materials companies were lower amid concerned about China's slowing economy. BHP Billiton and Rio Tinto fell in a range of 2% to 3%.

Shares of banks and financial players were also under pressure, with Commonwealth Bank of Australia down 2% as its Chief Executive Matt Comyn faced intense questioning from parliamentarians over the banks' governance failures. Westpac Banking Corp's shares fell as much as 2.3% as its CEO Brian Hartzer is scheduled to appear before the parliamentary inquiry later in the day. ANZ Banking and Australia Bank were lower in a range of 1.2% to 1.8%.

Telco giant Telstra was down 1.4% after it apologised to shareholders for a lack of clarity about how it calculates executive bonuses, acknowledging that some investors still feel they are too high despite a 30% cut.

CURRENCY: Australian Dollar was higher against greenback and other major currencies on Thursday. The Australian dollar was quoted at $0.7065, up from $0.7013 on Wednesday.

OFFSHORE MARKET NEWS, US stock market tumbled on Wednesday. Rising bond yields and lingering worries over the trade dispute between the US and China were the main factors driving down share prices. Many investors sold shares in New York because higher US long-term interest rates raise companies' borrowing costs, eroding their corporate earnings. The Dow Jones Industrial Average plunged 831.83 points or 3.2% to 25,598.74, the Nasdaq plummeted 315.97 points or 4.1% to 7,422.05 and the S&P 500 tumbled 94.66 points or 3.3% to 2,785.68.

The major European markets ended lower on Wednesday. The U.K.'s FTSE 100 Index slumped by 1.3%, while the French CAC 40 Index and the German DAX Index plummeted by 2.1% and 2.2%, respectively.

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