The Aussie market is trading lower for a second straight day following a weak lead from Wall St. The ASX 200 is slipping 9 points or 0.13% to 6803.8 after the three major US indices all fell more than 1% as the US Fed cut interest rates by 0.25%, the first rate cut since 2008. While that move was anticipated by markets, the shock came from a more hawkish tone by the Fed chair Jerome Powell, who stated that this was a “mid-cycle adjustment” and not necessarily the start of a string of rate cuts.
Locally, materials and communication stocks have been among the main weights with losses also for consumer staples, utilities and IT. Industrials are leading improvements while financials, consumer discretionary and healthcare are also higher.
Metals prices fell with gold suffering some of the heaviest losses. The weaker precious metal price has weighed on local gold miners. Australia’s largest gold miner, Newcrest Mining (NCM) is falling 3.7% while smaller miners are declining 4-5%. Resolute Mining (RSG) is down 7.6% after coming out of a trading halt yesterday. The miner announced after market close yesterday it has acquired Toro Gold, which has gold assets in parts of Africa, for US$274 million. RSG also revised its FY19 production guidance to 400,000 oz at a cost of US$960/oz, taking into account its recent acquisition.
In other news, Altura Mining (AJM) has signed a Binding Offtake Agreement with a Chinese firm for five years. The deal is for 50k dry metric tonnes per year of lithium concentrate and will start August 2019. AJM shares did climb 10% in early trade but is now 2.5% higher. Elsewhere, the ACCC has raised concerns over Qantas’ (QAN) acquisition of a 19.9% stake in Alliance Airlines (AQZ) stating it would reduce competition for several regional routes in Queensland.
On the economic front, national home prices rose slightly for the first time in July since September 2017. Prices across all capital cities rose 0.1% over the month. Gains were led by rises in Sydney, Melbourne and Brisbane with 0.2% lift but Adelaide, Perth and Canberra prices fell.
The Aussie dollar has picked up from its lows during the US session and is buying 68.5 US cents. So far, 1.4b units have traded hands worth $2.1b. 461 stocks are higher, 552 and weaker and 333 are unchanged.
Published by CommSec