Two tweets, new China tariffs & hawkish Fed see markets slip from highs: Aus shares lose 0.1% on week

Market Reports

by Jessica Amir

It was a record-breaking week for the Aussie share market hitting and closing at a new record all-time high on Tuesday (30 July 2019) for the benchmark S&PASX 200.  But it was a series of Trump tweets, a new China tariff from the US, and a hawkish comment from the US fed reserve that saw the share market close lower today and over the week, losing 0.1 per cent over our five trading days.

At the closing bell the S&P/ASX 200 index closed 20 points lower (0.3 per cent down) to finish at 6,769. Over the week, it lost 5 points or 0.1 per cent.

The biggest drag on the market today was the energy sector, which lost 2.5 per cent, after the oil price plunged earlier when Trump announced the new 10 per cent tariff on the remaining $300 billion of Chinese goods from September.

Going the other way, and seeing the biggest gain on the market today was the property sector, which gained over 2 per cent, with Goodman Group (ASX:GMG) rising 3 per cent and holding above almost eleven year highs that it hit early July.

Futures market

Dow futures are suggesting a fall of 32 points.
S&P 500 futures are eyeing a dip of 5 points.
The Nasdaq futures are eyeing a fall of 21 points.
And the ASX200 futures are eyeing a 0.4 per cent fall. 

Economic news

Australian retail sales rose more than expected, rising 0.4 per cent in June 2019 (seasonally adjusted), according to the latest from Australian Bureau of Statistics (ABS). Consensus expected retail sales to rise 0.3 per cent, following the 0.1 per cent lift in May 2019.

Company news

Shares in community developer, AVJennings (ASX:AVJ) lost about a month of gains today, after flagging that its FY19 profit before tax (PBT) will be impacted by the deteriorating property market in Melbourne and Sydney. As a result PBT is tipped to be $23.0 million. However, the company expects an improved result for FY20 with market fundamentals being supportive, combined with the economic and population growth, and lower for longer rates, of course combined with stronger employment. It also today inked an agreement for 3,500 lots in Queensland’s South-East Growth Corridor. Shares in AVJennings (ASX:AVJ) closed 2.5 per cent lower at $0.58. Year-to-date its shares are 10.38 per cent higher.

Rio Tinto (ASX:RIO) released its 2019 half-year results after the market close yesterday with underlying EBITDA of US$10.3 billion, a 11 per cent rise on the prior corresponding period. It was broadly in line with consensus (at $10.1 billion) but lower than Citi’s $10.8 billion expectation. RIO announced an ordinary dividend of US$1.51 per share, that’s a 50 per cent payout. RIO also announced a special dividend, of $1 billion (US$0.61) taking the total shareholder return to $2.12 per share, fully franked. Divisionally accross Rio Tinto, Citi says iron ore and aluminium earnings were in line with Citi's expectations, but copper, diamonds and energy and minerals were weaker than expected. Year-to-date its shares are 20.7 per cent higher.

Saracen Mineral Holdings' (ASX:SAR) takeover of Bligh Resources (ASX:BGH) has firmed, after lodging the first supplementary bidder’s statement with ASIC earlier today. The original takeover by Saracen was inked on 8 July 2019, and just days ago the takeover was made unconditional and compulsory, after the gold major bumped up its stake in the small cap to 91.80 per cent. Year-to-date SAR shares are 53.2 per cent higher.

Commonwealth Bank of Australia (ASX:CBA) finalised the $4.2 billion sale of Colonial First State Global Asset Management (CFSGAM) to Mitsubishi UFJ, resulting in a after-tax gain of about $1.5 billion. The transaction also increased the group’s common equity tier 1 (CET1) capital by $3.1 billion. CBA’s CEO Matt Comyn says the sale is an important milestone in executing its strategy 'to become a simpler, better bank'. CBA’s FY19 results are due Wednesday 7 August. Citi is expecting the group’s NPAT (continuing operations) to be $8.68 billion, that’s 1 per cent ahead of consensus. Year-to-date CBA ASX:CBA) shares are 13 per cent higher. Meantime, NAB (ASX:NAB) shares are up the most out of the big four banks, YTD up 17 per cent, followed by WBC (ASX:WBC), which is 15 per cent up and ANZ (ASX:ANZ) which has gained 13.6 per cent.

Best and worst performers of the day

The best performing sector was REITs, adding 2.1 per cent while the worst performing sector was Energy, shedding 2.5 per cent.

The best performing stocks on the S&P/ASX 200 were gold majors, led by Saracen Mineral Holdings (ASX:SAR), rising 10.9 per cent to close at $4.49. Shares in Resolute Mining (ASX:RSG) and Newcrest Mining (ASX:NCM) followed higher.

The worst performing stock in the S&P/ASX 200 was Fortescue Metals Group (ASX:FMG), dropping 6.1 per cent to close at $7.64 on the back of profit taking. (Out of the major iron ore miners, FMG shares are up the most, YTD up 82 per cent, followed by shares in RIO (ASX:RIO) which gained 21 per cent YTD, and BHP (ASX:BHP) which is up 14 per cent YTD). Today, the worst performer, FMG, was followed by GrainCorp (ASX:GNC) and Beach Energy (ASX:BPT).

Asian markets

Asian markets are tracking lower. Japan’s Nikkei has lost 2.1 per cent, Hong Kong’s Hang Seng has lost 2.1 per cent and the Shanghai Composite has lost 1.5 per cent.

Wall Street

US stocks wrapped up our four trading days this week lower. The Dow Jones lost 2.3 per cent, the S&P500 lost 2.5 per cent and the Nasdaq lost 2.7 per cent.

Commodities and the dollar

Gold is trading at US$1,433 an ounce, slightly higher on global equity weakness. 
Iron ore price rose 4.4 per cent to US$123.65, trading at five-year highs. 
Iron ore futures are pointing to a fall of 3.5 per cent.
Light crude is US$4.09 down at US$54.49 a barrel.
One Australian dollar is buying 68.12 US cents.