Australia Stocks drop on weak China Dec trade data

Headline indices of the Australian financial market reversed early gains to finish edged down on Monday, 14 January 2019, as investors continued opting to lock in profits in line with broader Asian peers, amid concerns over an ongoing U.S. government shutdown and worries about an economic slowdown in China after lower-than-expected export and import data for December 2018 stifled last week's optimism ensuing from Beijing and Washington progressing on trade talks. ASX sectors were mixed, with shares of energy, materials, and consumer discretionary sectors being notable losers, while consumer staples, communication services, and financial issues were notable gainers. At closing bell, the benchmark S&P/ASX200 index fell 1.21 points, or 0.02%, to 5,773.37 points, while the broader All Ordinaries index dropped 1.61 points, or 0.03%, to 5,833.23 points.

China's exports to the world fell 4.4% in December from a year earlier, the biggest monthly drop in two years, pointing to further weakening in the world's second-largest economy. Imports also unexpectedly contracted, falling 7.6%, the biggest decline since July 2016. China's global trade volume rose last year but its surplus with the world fell 16.2% to $351.76 billion in 2018, as imports rose 15.8% while exports gained 9.9%. The customs data showed that its exports to the U.S. contracted in December 2018 although its overall trade surplus with the U.S. hit a record $323 billion in 2018. Exports to the U.S. rose 11.3% to $478.4 billion for the year despite punitive tariffs imposed by President Donald Trump in a fight over Chinese technology ambitions. The customs data showed imports of American goods rose just 0.7% in 2018 over 2017, reflecting the impact of Beijing's retaliatory tariffs and encouragement to importers to buy more from non-U.S. suppliers.

shares of energy companies were also lower on profit taking after crude oil prices fell 2% in offshore trade on Friday, ending a nine-day rally. Shares in Santos fell 0.2%, Woodside Petroleum dropped 0.5%, and Oil Search shed 0.8%. Origin Energy was down 1.1% and Soul Pattinson dropped 0.4%. Caltex shares were 0.4% lower, with coal miners Yancoal and Whitehaven dropping 5.4% and 3.6% respectively.

Materials were the main drag on the market after disappointing Chinese trade data, with BHP dropping 0.24% and Rio Tinto down 0.3%. South32 was flat at A$3.40, while Bluescope Steel plunged 5.2% and Fortescue Metals dipped 1.3%. Gold miners Newcrest retreated 0.2%, while Northern Star and Evolution eked out rises of 0.43 and 0.53% respectively.

CURRENCY: Australian Dollar was tad lower against greenback and against a basket of other peers on Monday. The Australian dollar was quoted at 71.85 US cents, after topping out at a three-week peak of 72.35 US cents on Friday.

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