Australia Market falls 0.5%

Headline indices of the Australia stock market declined on Tuesday, 17 July 2018, as risk sentiment was dented amid mixed cues from offshore market overnight and drop in base metal and crude oil prices. Concerns over signs of softening in the Chinese economy - Australia's biggest export market - also dented sentiment after data showed second quarter economic growth expanded at a slower pace with June industrial output growth the weakest in over two years. Total nine out of ten ASX sector declined, with shares in materials, energy, and industrials, and technology issues being notable losers. The benchmark S&P/ASX 200 Index declined 31.52 points or 0.5% to 6,210. The broader All Ordinaries Index dropped by 31.20 points or 0.5% to 6,295.50.

Shares of materials and energy companies were the biggest drag on the index, in response to a fall in crude oil and base metal prices. The reopening of Libyan ports after recent closures, and comments from Russian Energy Minister Alexander Novak's suggesting increase production weighed on crude oil prices. London Metal Exchange (LME) metal prices fell overnight, extending a 5-week decline. BHP Billiton was declining more than 1%. Santos and Woodside Petroleum were losing almost 2% each.

Global miner Rio Tinto reported a jump in iron ore output shipments from Australia and indicated annual production would be at the upper end of its guidance, though the stock fell 1% on concerns over weak commodity prices.

Oil Search was hit by a double whammy of the oil price worries and an 18% decline in first half revenue, sending shares down as much as 2.4%.

Shares in Asaleo Care (AHY) declined 32% after reporting lower than forecast earnings, in addition to a profit warning. AHY reported a 9% fall in H1FY18 revenue to A$267.2 Million, while underlying Ebitda for the same period fell to A$46.3 Million, marking a 24% fall compared to the same time last year. The group lowered its expectations for its full year performance, forecasting FY18 underlying Ebitda in a range of A$80 million - A$85 million, compared to an earlier estimate of A$113 million to A$119 million. Higher raw material costs and increased competion in key markets were cited as influences.

CURRENCY NEWS: The AUD/USD traded in narrow range on Tuesday, showing some resilience in the face of declines in oil and base metal prices, along with the updated outlook for global economic growth. The International Monetary Fund (IMF), left estimates for global economic growth in 2018 and 2019 unchanged, but highlighted mounting risks to the outlook. The local unit was at 74.05 US cents lately, having slipped from 74.23 earlier and 74.36 US cents on Monday.

OFFSHORE MARKET: US stock market closed mixed on Monday, as investors weighed earnings results against trade tensions. The Dow Jones Industrial Average rose 44.95 points, or 0.2%, to 25,064.36. The S&P 500 index fell 2.88 points, or 0.1%, to 2,798.43. The Nasdaq Composite Index fell by 20.26 points, or 0.3%, to 7,805.72.

The major European markets also ended mixed on Monday. The STOXX600 index fell by 0.3%, but Germany's DAX index was up 0.2%. The UK FTSE index fell by 0.8%.

COMMODITY NEWS: Crude oil prices fell on Monday as Libyan ports began to re-open and slowing Chinese growth weighed on broader sentiment. Russian Energy Minister Alexander Novak's comments that Russia may lift oil output by more than 200,000 barrels per day also weighed on crude oil prices. Brent crude fell by US$3.49 or 4.6% to US$71.84 a barrel and the US Nymex fell by US$2.95 or 4.2% to US$68.06 a barrel.

Base metal prices fell on the London Metal Exchange (LME) on Monday, extending their 5-week decline. Zinc fell 3.6% and copper by 0.8% to near 1-year lows on China growth concerns.

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