ASX wipes out two months of gains, now 6% off all-time high: Aus shares down 2.45% at noon, despite better than expected trade surplus

Market Reports

by Jessica Amir

China responds to Trump’s new tariffs and US equities see their worst loss in 2019.

China has responded to Donald Trump with a suite of moves. It comes as the US President said China is a currency manipulator and has been ripping off the US, Trump also slapped a 10 per cent tariff on $300 billion of Chinese imports, ending a month-long trade truce. That’s on top $250 billion already tariffed at 25 per cent. On Monday, China retaliated, allowing the yuan to slide below the key 7 yuan to US dollar level, for the first time in over 10 years. We know, China, historically controls its currency. Plus, China also stopped purchases of agricultural products. However, just in the last hour, China’s central bank set its currency fixing stronger than expected, suggesting officials do want to slow the pace of declines in the yuan.

However, overnight in the US, Wall Street responded to China’s initial moves and Dow Jones lost 767 points or 2.9 per cent, dropping 961 points at one point. The S&P 500 slipped nearly 3 per cent, and the Nasdaq lost the most, 3.5 per cent.

For the S&P 500 it’s now more than 6 per cent below its record hit only last month.

And now the benchmark ASX200 is 6 per cent off its all-time high hit 30 July.

NAB said this morning it feels like it could be 'more than a correction', as corrections in the stock market usually moves markets 10-15 per cent.

And for us -  all the sectors are lower at the moment and the S&P/ASX 200 index is 2.5 per cent or 162 points lower at 6,478 at noon. And if you look an the intraday chart, the market is now gaining a bit of momentum, but is in the red, back where it was on 11 June 2019.  On the futures market the SPI is 2.5 per cent or 162 points.

Local economic news

RBA meets today with interest rates expected to hold, despite what's going on around the world. All eyes will be on the board’s interest rate decision at 2.30pm AEST with markets expecting the rate to hold at 1 per cent, after rates were cut in June and July.

Meantime, the ABS has reported Australia’s balance of trade bolstered ahead in June, rising to $8.036 billion, beating expectations, it would fall to $6 billion. The 30 per cent jump in Australia’s trade surplus from May’s surplus $6.17 billion (seasonally adjusted terms) comes as goods and services credits (exports of goods and services) rose $576 million (1 per cent), and non-rural goods rose $758 million (3 per cent).

Company news

Orocobre's (ASX:ORE) Managing Director and CEO, along with Toyota Tsusho Corporation (TTC) and Toyotsu Lithium Corporation held a ground-breaking ceremony to officially kick off construction at the first of its kind lithium faciliy, in Japan. The Naraha Lithium Hydroxide Plant (Naraha Plant) is designed to convert primary grade lithium carbonate feedstock from the Olaroz Lithium Facility, into purified battery grade lithium hydroxide. Shares in Orocobre Limited (ASX:ORE) are trading 3 per cent lower at $2.58 at noon.

The Federal Court of Australia has approved DuluxGroup (ASX:DLX) $3.6 billion takeover by Nippon Paint Holdings at $9.37 per Dulux share. DuluxGroup will lodge the court orders with ASIC today, making the takeover legally effective. Shares in DuluxGroup (ASX:DLX) are trading 0.1 per cent higher at $9.36 at noon.

Best and worst performers

The sector with the least losses is S&P/ASX Materials, shedding 1.3 per cent, while the worst performing sector is S&P/ASX Info Tech, shedding 4.8 per cent.

The best performing stock in the S&P/ASX 200 is Lynas Corporation Limited (ASX:LYC), rising 5.7 per cent to $2.69, followed by shares in Pinnacle Investment Management Group Limited (ASX:PNI) and Bingo Industries Limited (ASX:BIN).

The worst performing stock in the S&P/ASX 200 is Xero Limited (ASX:XRO),dropping 7.5 per cent to $59.00, followed by shares in Wisetech Global Limited (ASX:WTC) and Appen Limited (ASX:APX).

Asian markets

Japan’s Nikkei has lost 2 per cent, Hong Kong’s Hang Seng has lost 2.1 per cent and the Shanghai Composite has lost 1.8 per cent.

Commodities and the dollar

Gold is trading at US$1,463 an ounce.
Iron ore price fell 6.7 per cent to US$100.56
Iron ore futures are pointing to a fall of 0.9 per cent.
One Australian dollar is buying 67.81 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.