Australia Market trades softer ahead of G20 Summit

Headline indices of the Australian equity market were lower on Wednesday, 26 June 2019, following the weak cues from Wall Street overnight after comments from Federal Reserve Chairman Jerome Powell did not appear to signal the imminent interest rate cut. Around late afternoon, the benchmark S&P/ASX200 index dropped 6.63 points, or 0.1%, at 6,651.40 points, while the broader All Ordinaries sank 7.04 points, or 0.1%, at 6,727.50.

The US share market declined on Tuesday, partly reflecting a negative reaction to a Conference Board report showing a substantial deterioration in U.S. consumer confidence in the month of June. Additional selling pressure was generated in reaction to comments from the U.S. Federal Reserve Chairman Jerome Powell that the U.S. central bank is assessing whether current economic uncertainties call for lower rates, but noted the Fed will take a wait-and-see approach given how rapid recent economic changes have been. On the Wall Street, Dow Jones Industrial Average ended about 179 points lower at 26,548.22. The S&P 500 also closed approximately 0.95% lower at 2,917.38, while the Nasdaq Composite fell 1.51% to close at around 7,884.72.

Meanwhile, investors looked toward developments on the U.S.-China trade front, with Presidents Donald Trump and Xi Jinping set to meet at the G-20 summit later this week. The two leaders are expected to discuss the protracted trade fight between their two countries.

China and the U.S. have already slapped tariffs on billions of dollars worth of each other's goods over the past year. In May, the two economic powerhouses hiked tariffs targeting some goods. The Trump administration has said previously that Trump is ready to raise tariffs on all Chinese imports into the U.S. if the two countries fail to arrive at a deal.

Market expectations for a meaningful breakthrough being achieved in U.S.-China trade talks are quite low, so any signs of an improvement could bode well for risk sentiment.

Financials were major drag n the benchmark index, with the big four banks -- ANZ Banking, Westpac, Commonwealth Bank and National Australia Bank - were lower in a range of 0.1% to 0.3%.

Energy stocks were higher after crude oil prices jumped in the Asian trading hours, as the international benchmark Brent crude futures contract surged 1.4% to $65.97 per barrel, while U.S. crude futures soared 2.01% to $58.99 per barrel. The moves come as U.S.-Iran relations remain tense following the announcement of fresh tariffs by Washington on Tehran after the latter downed an unmanned American drone last week. Among energy stocks, Woodside Petroleum, Oil Search, and Santos were lower in a range of 0.2% to 0.6%.

CURRENCY NEWS: The Australian dollar edged up against the U.S. dollar on Wednesday. The Australian dollar was quoted at $0.6964, compared to $0.6960 on Tuesday.

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