Aussie shares are falling for a third straight session on Friday. The ASX 200 is 0.45% or 30pts lower heading towards lunch, trading at 6758. This follows a surprise tweet from US President Donald Trump, announcing a 10% tariff on US$300 billion of Chinese imports to start on September 1. This led to a near 600 point swing on the Dow Jones overnight, which finished 280 points lower.
Commodity prices were rocked by the tariff development with global oil prices falling up to 8%. Iron ore also fell more than 3%. The materials and energy sectors have been the main laggards. BHP Group and Rio Tinto (RIO) are both more than 3% lower. RIO also announced US$4.1 billion in first half earnings after market close yesterday and will pay around US$3.5 billion in dividends, including a special dividend. Losses for financials have also weighed but defensives such as gold miners have benefitted with a rally in demand driving the price of the precious metal higher.
In company news, Lynas Corporation (LYC) shares are climbing 6% after being advised that the Malaysian Prime Minister would not require LYC to export its Water Leach Purification (WLP) residue as a condition for its operating licence in the country. Formal notification of its licence is expected in mid-August.
A number of companies have provided trading updates ahead of the August reporting season. Grain business, GrainCorp (GNC) is now expecting underlying earnings (EBITDA) for FY19 to be between $65 and $85 million. GNC also anticipates a net loss after tax of up to $90 million as drought conditions and “ongoing disruptions to international grain trade” impact its business. GNC shares are sliding 7% at lunch. Bega Cheese (BGA) has also blamed the drought for a downgrade to its FY19 earnings guidance. EBITDA guidance was lowered by ~10% to $113-$117 million with increased competition on milk prices also a factor. BGA shares have lost 1.3%.
Residential property developer AV Jennings (AVJ) expects FY19 profit before tax at $23 million, impacted negatively by a deterioration in the Sydney and Melbourne market conditions over the past year. AVJ shares are down 4%.
Retail sales for the month of June beat market expectations by lifting 0.3% for the month. However retail sales only rose 0.2% for the three months to June. The Aussie dollar remains near multi year lows near 68 US cents. So far, 1.4b units have been traded worth $2.7b with 439 stocks higher, 585 weaker and 301 unchanged.
Published by CommSec