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Increasing trade tensions have eroded a majority of gains made over November, wiped out in just the second trading day of December. Investor confidence has been shaken with the ASX 200 slumping 119 points or 1.7% to 6744 in early trade, on track for its biggest daily loss since October 2 this year.

While US-China trade relations have dominated news headlines and is a key driver for global markets, Donald Trump has escalated trade tensions with Brazil, Argentina and France with threats of tariffs on imports ranging from steel, aluminium and French champagne. There have also been few developments in US-China relations and a signing of the phase one trade deal looks no closer. European markets fell up to 2% while Wall Street fell roughly 1% and closing at session lows.

Locally, every single sector is deeply in the red with roughly 95% (190) of the top 200 stocks in negative territory. The big four banks are down between 1-1.9% with Commonwealth Bank (CBA) falling the hardest. It’s a similar story for the major miners. BHP Group (BHP) and and Fortescue Metals (FMG) are both sliding 1.3% but Rio Tinto (RIO) is faring better and only softer by 0.8%. In percentage terms, tech, consumer staples and utilities are falling the most. Clinuvel Pharmaceuticals (CUV) is one of the best performing stocks on the ASX 200 with a gain of just 1.5%

In company news, Metcash (MTS) is down 1.2% after confirming it will write a $237.4 million writedown for the first half of FY20 with convenience store chain, 7-11 not renewing its supply agreement when it expires next year. MTS will release its financial statements on December 5. Caltex (CTX) has rejected a proposed $8.6 billion takeover bid by a Canadian firm as undervaluing the service station owner but did not rule out accepting a revised bid. CTX shares have slipped 0.7%. Santos (STO) is holding an investor day and has upgraded its production guidance to 120 mmboe by 2025 with recent acquisitions helping drive the increase. STO shares are 0.1% higher.

On the economic front, the RBA is expected to keep rates on hold when it meets for the last time in 2019. Meanwhile, Australia’s has notched a second successive quarterly current account surplus. The Aussie dollar is buying 68.24 US cents. So far 1.2b units have traded worth $2.5b with 289 stocks higher, 681 weaker and 350 unchanged.

Published by CommSec