Australia Market dives on soft offshore lead, weaker commodity prices

Headline indices of the Australian share market were lower on Monday, 26 November 2018, as risk aversion selloff triggered on tracking weak lead from Wall Street last Friday, plunge in crude oil prices, and broader concerns about the global economy. In late afternoon trade, the benchmark S&P/ASX200 index declined 35.60 points, or 0.62%, to 5,680.60 points, while the broader All Ordinaries index fell 35.81 points, or 0.62%, to 5,757.60 points.

Crude oil prices traded near their lowest levels since October last year, having dived 8% on Friday for the biggest weekly losses in nearly three years, with rising US production intensifying fears of a supply glut. The rout in crude oil intensified concerns about surging supplies and weak demand growth drove prices sharply lower. In Monday trade, US crude futures fetched $US50.53 per barrel, slightly higher though not far from Friday's low of $50.15. Brent crude futures last stood at $58.99 per barrel, near Friday's low of $58.41. On last Friday, West Texas Intermediate (WTI) futures for January settlement plunged $4.24, or 7.8%, to $50.39 a barrel on the New York Mercantile Exchange, while Brent, the global crude benchmark, fell $3.80, or 6.1%, at $58.80 a barrel in London. So far this month, WTI and Brent futures were down more than 21%, on track for their biggest fall since October 2008.

Markets are also bracing for a crucial meeting between US and Chinese leaders at the end of the week as trade tensions between the economic superpowers showed no signs of easing.

Petroleum-linked shares suffered a bruising session after oil prices plummeted to their lowest level in more than a year on last Friday. Among energy players, oil majors Beach Energy, Woodside Petroleum and Oil Search shed in a range of 1% to 4%.

Metals and mining stocks were also hit by weaker iron ore, nickel, and copper prices, with iron ore miners Rio Tinto and Fortescue Metals Group losing about 2.6% and 3.2%, respectively. Diversified miner BHP Group fell more than 3% to hit its lowest since mid-April.

Financial stocks edged up as gains in three of the country's "big four" banks bolstered the sector. In the banking sector, ANZ Banking, Commonwealth Bank and National Australia Bank were higher by 0.2% to 0.7%, while Westpac is down 0.3%.

Among individual stocks, property developer Dexus rose about 0.5% after the real estate developer said it would establish a US$1.45 billion logistics trust with Singapore's sovereign wealth fund GIC to invest in Australian logistics properties.

CURRENCY: Australian Dollar, seen as a proxy for China-related trades, eased against greenback and other major currencies on Monday, amid lingering concerns about the global economic outlook. The Australian dollar was quoted at $0.7232, down from $0.7249 on Friday.

OFFSHORE MARKET NEWS: Wall Street stocks resumed their downward slide in a holiday-shortened session on Friday (Nov 23) as a sharp drop in oil prices sparked global growth worries. The Dow Jones Industrial Average finished down 0.7% at 24,285.95. The broad-based S&P 500 also shed 0.7% to 2,632.56, while the tech-rich Nasdaq Composite Index slid 0.5% to 6,938.98.

The major European markets turned in a mixed performance on Friday. The U.K.'s FTSE 100 Index edged down by 0.1%, while the French CAC 40 Index rose by 0.2% and the German DAX Index climbed by 0.5%.

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