Australia Market closes lower on profit booking, Fed rate decision in focus

Headline indices of the Australia share market closed down on Wednesday, 31 July 2019, as investors booked profits after the benchmark closed at an all-time high in the previous session. Meanwhile, selloff pressure mounted on following a weak lead from Wall Street overnight, worries over US-China trade negotiations after US President Donald Trump's negative tweets on China, and on caution ahead of the Federal Reserve's interest rate decisions due later in the day. Most of ASX sectors were lower, with banks, consumer discretionary, and real estate stocks were notable losers. The only sectors to out-perform today were energy, communications, and consumer staples. At closing bell, the benchmark S&P/ASX200 index dropped 32.48 points, or 0.47%, to 6,812.60. Meanwhile the broader All Ordinaries index, which tracks the nation's 500 biggest listed companies, declined 31.63 points, or 0.46%, to 6,896.70.

Wall Street and European markets fell on Tuesday, as traders worried over the state of US-China trade talks, which re-commenced yesterday, while also awaiting the outcome of the US Fed's two day meeting concluding early Thursday morning.

U.S. President Donald Trump said in a series of tweets Tuesday that China is not keeping its promise of buying more U.S. agricultural products. For its part, China insists that it has bought U.S. agricultural products. Trump's comments come as U.S.-China trade talks are happening in Shanghai from July 30 and 31, as the two economic powerhouses aim to reach a deal to end a protracted trade war.

Meanwhile, investors await the U.S. Federal Reserve's announcement of its decision on interest rates. The Fed is set to deliver its decision on interest rates later Wednesday, with expectations that it will cut interest rates by a quarter point.

Shares of financial players declined, with top lender Commonwealth Bank of Australia dropping 0.7%. Other members of the Big Four slid between 0.3% to 0.8%. Meanwhile, Australian shares of British lender CYBG PLC fell 10.9% to nearly six-month lows following a reported dip in mortgage loans and shrinking net interest margins.

Cement manufacturer Adelaide Brighton closed lower after it flagged weaker annual earnings and scrapped its interim dividend. The company's shares tumbled more than 19% after the big downgrade on Wednesday, with Adelaide Brighton also warning that it would suffer impairments of up to A$100 million for the six months ended June 30, stemming from a review of its balance sheet. Other building materials stocks including Boral and CSR also suffered substantial falls on the sharemarket on Wednesday after the Adelaide Brighton profit warning.

Commercial explosives supplier Orica Ltd jumped after brokerage house Morgans raised Orica's price target following upbeat commentary from the company's management after its investor day presentation.

ECONOMIC NEWS: Australia Consumer Price Inflation Rises In Q2 --Australia's consumer price inflation rose at a faster-than-expected rate in the second quarter on higher fuel prices, data from the Australian Bureau of Statistics showed on Wednesday. On a quarterly basis, consumer prices gained 0.6% in June quarter, after remaining unchanged in the preceding quarter. Prices in automotive fuel rose by 10.2% and those of international holiday travel and accommodation rose by 2.7%. Prices of medical and hospital services and tobacco grew by 2.6% and 2.4%, respectively. The consumer price index rose 1.6% year-on-year in second quarter, following a 1.3% increase in the previous quarter.

CURRENCY NEWS: The Australian dollar eased against greenback. The Australian dollar changed hands at $0.6891 after slipping from the $0.690 handle yesterday.

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