Australia: Stocks fall ahead of RBA rate decision

Headline equities of the Australia stock market were down on Tuesday, 07 August 2018, as risk appetite remained subdued amid U.S.-China trade jitters after Beijing threatened retaliation last week and on caution ahead of the Reserve Bank of Australia's monetary policy decision due later in the day. Most of ASX subindexes declined, with shares in materials, telecommunications, consumer discretionary, and financials were notable losers, outweighing gains in energy stocks which tracked oil prices higher. Around late afternoon, the benchmark S&P/ASX 200 Index declined 23.88 points, or 0.4%, to 6,249.10. The broader All Ordinaries Index was down 22.10 points, or 0.35%, to 6,336.90.

Shares of materials sector were the biggest drag to the benchmark, weighed by drop in base metal prices at LME on Monday amid worries about the damage to global economic growth from the trade dispute between the United States and its trading partners and a stronger US dollar. Among miners, Rio Tinto, BHP Billiton, and Fortescue Metals were down in a range of 1-2%.

 

Shares of energy companies mostly higher, inline with strength in crude oil prices overnight due to reports that Saudi crude production unexpectedly fell in July. WTI crude for September ended up $0.52% or 0.80% at $69.01 a barrel on the New York Mercantile Exchange. Woodside Petroleum and Oil Search were up in a range of 0.5% to 1%.

Shares of banks and financials were lower, with ANZ Banking, Westpac, National Australia Bank and Commonwealth Bank were down in a range of 0.4% to 0.7%.

Among individual stocks, Amcor fell as much as 6% after the world's biggest listed packaging company announced a US$5.25 billion all-stock deal to buy US-listed Bemis Company Inc.

Yancoal Australia rose as much as 4% after announcing it will restart its Austar coking coal mine in New South Wales after receiving regulatory approval to resume production.

Wesfarmers shares were up as much as 3%% and New Hope Corp were up as much as 9% on reports it would sell its 40% stake in the Bengalla Joint Venture thermal coal mine project to partner New Hope Corp for A$860 million.

ECONOMIC NEWS: Australia AiG Construction Sector Accelerates In July - Australia construction sector accelerates in July, the latest survey from the Australian Industry Group revealed on Tuesday with a Performance of Construction Index score of 52.0. That's up from 50.6 and it moves further above the boom-or-bust line of 50 that separates expansion from contraction.

CURRENCY NEWS: The Australian dollar was little softer against greenback and other major currencies. The Australian dollar was at 73.9 US cents, from 73.95 US cents on Monday.

OFFSHORE MARKET NEWS, US stock market closed slight higher on Monday. The Dow added 39.60 points or 0.16% to 25,502.18, while the Nasdaq gained 47.66 points or 0.61% to 7,859.68 and the S&P 500 rose 10.05 points or 0.35% to 2,850.40.

The major European markets ended mixed on Monday. The DAX of Germany dropped 0.14% and the CAC of France fell 0.03%, while the FTSE 100 of the U.K. gained 0.06%.

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