Australia Market treads water

The Australian share market edged lower after floating in and out of the boundary line on Monday, 30 September 2019, as risk sentiments were subdued on weaker than expected China's official manufacturing PMI data and mounting fears of an escalation in Sino-U.S. trade tensions. Around late afternoon, the benchmark S&P/ASX200 index fell 8.72 points, or 0.13%, to 6,707.40, while the broader All Ordinaries sank 6.39 points, or 0.09%, to 6,817.70.

Sydney share market commenced trading with a back-foot on mounted fears of an escalation in Sino-U.S. trade tensions after news that the U.S. administration is considering de-listing Chinese companies to limit U.S. investment in Chinese companies. High level talks are still expected to take place on October 10 and 11.

Adding to the gloom, official China's factory activity shrank for the fifth straight month in September, pointing to persistent pressure on Southeast Asia's biggest trading partner from the protracted trade war. The manufacturing purchasing managers index rose to 49.8 in September from 49.5 in August, according to the National Bureau of Statistics released on Monday. A subindex measuring total new orders received by manufacturers in China rebounded to 50.5 in September from 49.7 in August. China's official nonmanufacturing PMI, also released Monday, edged down to 53.7 from 53.8 in August. Meantime, private business survey showed China's factory activity unexpectedly expanded at the fastest pace in 19 months in September as plants ramped up production and new orders rose. The Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) for September rose to 51.4 from 50.4 in August, marking the second straight month of expansion. The 50-mark separates expansion from contraction on a monthly basis.

Investors are bracing for a potential interest rate cut at the RBA's October meeting tomorrow. The market is pricing in a near 80% chance that the Reserve Bank will cut rates by 25 basis points, which would make a third rate cut since June this year and lower the official cash rate to a new historic low of 0.75%.

Nufarm (NUF) shares climbed up 23% after the crop protection business announced that it has agreed to sell its South American division to Japanese conglomerate Sumitomo for A$1.18 billion. NUF also released its FY19 results with a net profit of A$38.3 million and confirmed it won't pay a final dividend.

CURRENCY NEWS: The Australian dollar declined against greenback on Monday. The Australian dollar, sensitive to shifts in broader risk appetite, changed hands at $0.6756 after slipping from levels above $0.678 last week.

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