Australia Stocks start year in wary mood

Headline indices of the Australian financial market were lower on the first trading day of the new year, Wednesday, 2 January 2019, after figures showing that China's manufacturing sector contracted for the first time in 19 months in December. Among ASX sectors, losses in financial and energy sectors were balancing out with gains in healthcare, mining, and tech sectors. In late afternoon trade, the benchmark S&P/ASX200 index fell 72 points, or 1.3%, to 5,574.40 points, while the broader All Ordinaries index shed 67.80 points, or 1.2%, to 5,641.60 points.

Figures on Wednesday showed China's manufacturing sector contracted for the first time in 19 months in December, with the Caixin-Markit manufacturing purchasing managers' index dropping from 50.2 in November to 49.7, below the 50-point level separating expansion from contraction. It also mirrored the official reading from the National Bureau of Statistics released on Monday, which fell from 50 in November to 49.4 in December, its lowest level since January 2016. The private survey focuses on small and medium-sized enterprises while the official PMI gauge focuses on large companies and state-owned enterprises.

Shares of financials were lower, with so-called Big Four banks led losses. Australia and New Zealand Banking Group traded down by 1.7%, Commonwealth Bank of Australia slipped around 1%, Westpac declined by 1.6% and National Australia Bank shed 1.5%. Insurers IAG, QBE and Suncorp turned around a flat to sit slightly higher, while AMP share rose 2.4%

Shares of energy stocks were recording losses despite oil prices posting modest gains on Monday. Oil Search, Origin, Santos, Soul Pattinson, and Woodside were down by between 0.73 and 0.15% each.

Telstra weighed on the telecommunications sector with a 0.9% drop, while TPG fell further, dropping 1.5%.

Shares of materials sector were mostly higher. Big miner BHP jumped 0.6%, with BlueScope Steel gained 1.3%. Rio Tinto dropped 0.5% and Fortescue Metals extended losses by 0.5%. South32 dropped 0.3% after its exploration partner AusQuest said two of its projects in Western Australia hadn't panned out.

Healthcare stocks were higher with ResMed outpacing benchmark CSL with a 1.4% rise. Tech stocks were up thanks to a 3% gain for Wisetech, and a 2.1% rise for Xero.

CURRENCY: Australian Dollar was tad higher against greenback and against a basket of other peers on Wednesday. The Australian dollar was quoted at 70.41 US cents from 70.62 US cents on Monday.

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