Aussie shares are having a rough start to the final week of August, with the ASX 200 down 1.5 per cent or 99pts to 6427.5 as US-China relations worsen. All sectors and 90 per cent of companies on the market are in negative territory.
The US-China dispute escalated further in recent days. Friday night, China announced additional tariffs of between 5 and 10 per cent on US 5,078 products worth US$75bn. This includes cars, soybeans, oil, frozen pork and nuts.
President Trump wasted no time to retaliate announcing fresh tariffs after US market close Saturday morning. Trump said the US will increase tariffs on almost all Chinese goods by 5 per cent. This includes the $250bn of Chinese goods already taxed; with tariffs expected to lift from the current 25 per cent to 30 per cent. The US said it will also raise tariffs set to kick in next month on $300bn from 10 per cent to 15 per cent.
The Fed Chair Jerome Powell spoke at the Jackson Hole Symposium in Wyoming at the weekend. He said that while the US economy is in a ‘favourable place’ and kept the door open for further rate cuts, he warned the US faces ‘significant risk’ due to the trade war.
All sectors and 90 per cent of companies on the ASX 200 are losing ground. The only bright spot is the gold sub-sector thanks to a flight to safety and strong gold price. The seven best performers on the market are all producers of the metal.
Boral (BLD) is down 15 per cent and has hit a six-year low after the building materials supplier disappointed the market with its outlook. BLD expects profits to drop by between 5 and 15 per cent in 2020.
G8 Education (GEM) is down 16 per cent after the childcare centre operator’s profits slid by 20 per cent on higher costs.
Fortescue Metals (FMG) is down 3.5 per cent, following other miners lower despite a solid profit result. Australia’s third largest iron ore miner more than tripled annual profit to US$3.19bn and will pay shareholders a record dividend to 24c/share. Thanks to a lift in the iron ore price between January and June, FMG was paid on average 50 per cent more for each tonne of ore sold than a year earlier.
Bedding and homewares retailer, Adairs (ADH) and Shaver Shop (SSG) are both higher following improving sales.
1.5bn shares have changed hands so far today worth $2.6bn. 341 stocks are up, 760 are down and 277 are unchanged.
Published by CommSec