Australia Market falls as trade worries weigh

The Australia stock market declined on Tuesday, 4 September 2018, as risk sentiments dampened by the threat of a further escalation in the Sino-US trade dispute. Investors were barely budged on the widely-expected decision by the Reserve Bank to keep its key interest rate at an all-time low of 1.5%, and a change seems no nearer even as commercial banks nudge up their home loan rates to protect profit margins. Most of ASX sectors declined, with financials being notable losers on reports of fresh investigations into financial institutions. The benchmark S&P/ASX200 index ended down 17.80 points, or 0.28%, at 6,293.07 points, while the broader All Ordinaries was down 17.67 points, or 0.28%, to 6,398.85 points.

U.S. President Donald Trump has said he is ready to implement new tariffs on Chinese imports as soon as a public comment period on the plan ends on Thursday, which would be a major escalation after Washington already applied tariffs on $50 billion of exports from China.

 

Data showed manufacturing activity in China grew at the slowest pace in more than a year in August, compounding fears that the intensifying U.S.-led trade war could derail growth, not just in China, but globally.

Financial stocks were lower on indications the country's superannuation regulator is opening up fresh investigations into the sector, following revelations of widespread wrongdoings in the banking royal commission inquiry. Earlier on Tuesday, the Australian Securities and Investments Commission said Westpac had agreed to pay a $35 million fine after admitting to wrongly assessing people's ability to repay mortgages. Westpac, Commonwealth Bank, National Australia Bank and ANZ Banking were lower in a range of 0.2% to 0.6%.

Shares of energy players were also weak, with Whitehaven Coal leading the losses, sliding 8%, as the stock trades ex-dividend. Santos lost more than 1%, Oil Search declined 0.3% and Woodside Petroleum was down 0.2%.

Shares of healthcare and materials shares, however, ended higher helped by gains in BHP Billiton, Fortescue Metals, Cochlear and CSL.

ECONOMIC NEWS: Australia Current Account Deficit widens in June quarter-- Australia's current account deficit widened from the March quarter's $11.7 billion to $13.5 billion in the three months to June on a seasonally adjusted basis, Australian Bureau of Statistics data revealed. The balance on goods and services fell 16 per cent to a surplus of $2.81 billion, as commodity price rises and an improvement in the services balance failed to offset an increase in goods imports and a fall in international income from employment and investment.

RBA leaves rates unchanged The Reserve Bank of Australia kept official interest rates unchanged for a record 25th consecutive month in September, a decision that was widely expected by financial markets. Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time, the Bank said in its Monetary Policy Statement.

CURRENCY NEWS: The Australian dollar was up against the U.S. dollar on Tuesday. The Aussie dollar was at 72.05 US cents, up from 71.90 US cents on Monday.

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