RBA expected to cut rates for 1st time in 2.5yrs: ASX shed 1.2% on global trade tensions

Market Reports

by Jessica Amir

The Australian share market continued to fall today losing 0.7 per cent at noon before closing 1.2 per cent lower.

At the open investors were spooked after China released an official statement, blaming the US for the trade war, illustrating a widening gap between the two powerhouse nations.

Notwithstanding that, US President Donald Trump threatened a 5 per cent tariff on all Mexican imports from 10 June. US stocks closed sharply lower on Friday with the major US indices losing between 1.3-1.5 per cent with stocks like Fiat Chrysler falling 5.8 per cent and Volkswagen losing 2.6 per cent.

Back home, most of our sectors made a loss of over 1 per cent, with Healthcare and Utilities falling the least. While property stocks like Centuria (ASX:CNI) gained 2.2 per cent, and and Goodman Group (ASX:GMG) rose 1.4 per cent.

The S&P/ASX 200 index closed 1.2 per cent or 76 points lower at 6,321.

Futures market

Dow futures are suggesting a fall of 110 points.
S&P 500 futures are eyeing a dip of 13 points.
The Nasdaq futures are eyeing a fall of 48 points.
And the ASX200 futures are eyeing a 68 point fall.

Economic news

The RBA is expected to slash rates by 0.25 per cent to 1.25 per cent tomorrow. It will be the first rate cut in 2.5 years (30 months). Rates were last cut on 3 August 2016. So all eyes will be on the RBA website at 2.30pm for the decision.

CoreLogic today released fresh property data saying the pace of property declines eased further in May, although dwelling values are still trending lower across Australia and have been since the beginning on 2019. Nationally, dwelling values were down 0.4 per cent in May, which was the smallest month-on-month decline since May 2018.

Company news

Fleet, equipment leasing and auction services company Eclipx Group (ASX:ECX) shares hit a new two-month high today, extending Friday’s gains of 29.5 per cent. Credit Suisse upgraded the stock to outperform, from neutral, raising its target price to $1.40, up from $0.88. On Friday the leasing company announced it will be renewing its senior leadership team and would be looking at selling off underperforming non-core businesses, including Grays, Right2Drive and Commercial Equipment. Shares in Eclipx Group (ASX:ECX) closed 19.6 per cent higher at $1.34.

ANZ (ASX:ANZ) completed the sale of OnePath Life, its Australian life insurance business, to Zurich Financial Services Australia. It also marks the start of a 20-year agreement for Zurich to provide life insurance products to ANZ customers through the bank’s channels.

AMP’s (ASX:AMP) group CFO Gordon Lefevre has stayed on past his effective resignation date (1 June 2019) and AMP today advised he will stay on as Group CFO through the company’s 1H19 results and will also continue to drive the sale of AMP's life insurance division to Resolution Life. His replacement, John Patrick (JP) Moorhead will now commence Group CFO responsibilities on 1 October 2019.

Agricultural chemical company Nufarm (ASX:NUF) sent a release to the market announcing as it’s supplier of glyphosate based herbicides, the company is exposed to risk of litigation brought against such suppliers.

Best and worst performers of the day

The best performing sector was S&P/ASX A-REIT adding 0.7 per cent while the worst performing sector was S&P/ASX Energy shedding 1.8 per cent.

The best performing stock in the S&P/ASX 200 was Eclipx Group (ASX:ECX), rising 19.6 per cent to close at $1.34 Shares in Regis Resources (ASX:RRL) and Saracen Mineral Holdings (ASX:SAR) followed higher.

The worst performing stock in the S&P/ASX 200 was Seven Group Holdings Limited (ASX:SVW), dropping 7.4 per cent to close at $17.37. Shares in Bravura Solutions (ASX:BVS) and Link Administration Holdings (ASX:LNK) followed lower.

Asian markets

Lower: Japan’s Nikkei has continued to fall and is now 1.1 per cent, Hong Kong’s Hang Seng has lost 0.2 per cent and the Shanghai Composite has slipped into the red and is 0.2 per cent.

Commodities and the dollar

Gold is trading at US$1,312 an ounce.
Iron ore price fell 2.2 per cent to US$101.60
Iron ore futures are pointing to a fall of 3.3 per cent.
Light crude is US$3.09 lower at US$53.50 a barrel.
One Australian dollar is buying 69.44 US cents.

Jessica Amir

Finance News Network
Jessica joined FNN in January 2017 after having worked in financial advising for seven years and in TV journalism for seven years, specialising in finance, equities and analysis. She has interviewed former Prime Ministers of Australia, Tony Abbott, Julia Gillard and Kevin Rudd and ex Treasurer Jo Hockey. Jessica has worked as a journalist with Sky News Business, ABC 1, ABC's The Business, ABC24 and has also been a regional Channel 7 and 9 TV reporter with Prime7 and Win News.