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Australia Market drops as US-China trade war escalates

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Headline indices of the Australia share market declined on Monday, 26 August 2019, as sharp escalation in the US-China trade war rattled investors. Every sector on the ASX 200 index was submerged in a sea of red, with energy, health care and materials being notable losers. At closing bell, the benchmark S&P/ASX200 index tumbled 83.03 points, or 1.27%, to 6,440.10. Meanwhile the broader All Ordinaries index, which tracks the nation's 500 biggest listed companies, declined 83.32 points, or 1.26%, to 6,531.00.

The Australian sell-off comes after the US markets sunk over the weekend upon yet another escalation in the US-China trade war. The US President Donald Trump announced a 5% additional duty on $550 billion in targeted Chinese goods, hours after China unveiled retaliatory tariffs on $75 billion worth of U. S. products with new tariffs and hikes to existing duties.

On Friday, the US said it would begin the process of raising tariffs on around $250 billion of Chinese imports from 25% to 30%. Those hikes will be introduced from 1 October. The US also said fresh tariffs on an additional $300 billion of Chinese goods, announced earlier this month, will now be at a rate of 15% instead of 10%.

The first batch of those tariffs will be introduced in September. In a tweet, Mr Trump said he planned to order US firms working in China to move their operations back to the US. It is unclear how he could force firms to comply.

The world's two largest economies have been locked in a bruising trade battle for the past year that has seen tariffs imposed on billions of dollars worth of one another's goods. Mr Trump has long accused China of unfair trading practices and intellectual property theft. In China, there is a perception that the US is trying to curb its rise.

The energy sector was the worst performing sector for the day. Woodside Petroleum (WPL), the largest listed energy company on the Aussie market, was the main drag as it traded ex-dividend and fell 3.7%.

Banks and healthcare also lagged. CSL Ltd (CSL) lost 1.9% while the big 4 banks fell up to 1.4%.

Boral Ltd (BLD) slumped 20.5% after the building materials maker reported a 38% decline in net profit to $272.4 million as weakness in the Australian property market over the past 12 months weighed on its results.

CURRENCY NEWS: The Australian dollar, a liquid proxy for emerging market and China risk, was down against greenback on Monday. The Australian dollar changed hands at $0.6742 after slipping from highs above $0.678 the previous trading week.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, August 26 2019. 13:22 IST