Australia, New Zealand: Shares dive on Trump's vow to hike tariffs

[BENGALURU] Australian shares fell to a near two-week low on Monday as US President Donald Trump's threats to raise tariffs on Chinese goods erased hopes of a trade deal between the world's largest economies, following months of negotiations.

The S&P/ASX 200 index fell 1.2 per cent, or 74.5 points, to 6,261.3 by 0110 GMT having ended little changed on Friday.

Mr Trump announced on Sunday that he would hike US tariffs on US$200 billion worth of Chinese goods this week and target hundreds of billions more soon.

The comments come before another round of trade talks between China and the United States scheduled for Wednesday, which according to a Wall Street Journal article China is considering cancelling.

"What China's response will be, whether it cancels - or sends - the delegation that was heading to Washington this week is going to be critical to the markets reaction over a longer time frame," said Greg McKenna, founder of McKenna Macro, in a note.

The prolonged trade tensions between the world's two largest economies has roiled global financial markets and caused growing concerns regarding a slowdown in global economic growth.

Financial stocks dropped more than 1 per cent to a near two-week low. Shares of Westpac Banking Corp fell as much as 2.3 per cent after the country's No. 2 lender posted a 22 per cent fall in first-half earnings, hit by a surge in customer refunds following a landmark inquiry into misconduct in the sector.

Shares of the other three "Big Four" banks fell in a range of 0.04 per cent and 0.6 per cent.

Material stocks shed as much as 1.1 per cent to hit its lowest in nearly three months. Shares of global miner BHP Group fell 1.1 per cent to a near two-month low, while its rival Rio Tinto dipped 1.3 per cent.

Energy stocks fell as much as 2.5 per cent to its lowest since Feb 1 with shares of Beach Energy and Worley Parsons losing 5.2 per cent and 4.4 per cent, respectively.

Meanwhile, the Aussie gold index rose 0.4 per cent, recovering from a more than one per cent fall on Friday as volatility in the markets push investors toward safe haven assets.

Shares of Ramelius Resources and Evolution Mining slid 3.4 per cent and 2.3 per cent, respectively.

New Zealand's benchmark S&P/NZX 50 index fell 0.7 per cent, or 79.24 points, to 9978.84 coming off a record high the index hit last week.

New Zealand listed shares of A2 Milk Company shed 3.3 per cent. China is the biggest market for the firm's products. Meanwhile, shares of utility firm Meridian Energy dropped 1.7 per cent.

REUTERS