Australia: Shares drop as Trump tariff threat rattles miners; New Zealand down

[BENGALURU] Australian shares saw their worst day in more than two weeks on Friday, with China-reliant miners leading the fall, after US President Donald Trump said he will slap a 10 per cent tariff on US$300 billion of Chinese imports and could raise them further.

The S&P/ASX 200 index fell 0.5 per cent, or 30.8 points, to 6,758 by 0208 GMT. The benchmark slipped 0.4 per cent on Thursday.

"If there was any doubt that the US-China trade negotiations are drifting further apart, this latest trade escalation puts that debate to rest," Stephen Innes, managing partner at VM Markets Singapore, said in a note.

The announcement on Thursday extends Mr Trump's trade tariffs to nearly all China's imports into the United States.

Mining stocks, whose primary export destination is China, dropped as much as 1.8 per cent to their lowest since June 20.

Rio Tinto, the country's second-biggest company, slumped to a near three-month trough even as it delivered record interim payout and announced its highest margins in a decade.

China is Australia's top trade partner and a key buyer of its commodities exports, making it especially vulnerable to any slowdown in the world's No.2 economy.

The world's biggest miner BHP Group dropped to nearly two-month lows, while Fortescue Metals Group saw its worst day in over three years.

Lower iron ore prices also piled on the pressure as Brazil's Vale presented an upbeat outlook and said its joint-venture with BHP is likely to come online in the second half of the year.

However, gold miners soared to a more than eight-year peak as tariff threats sent investors scurrying to safe-haven assets.

Resolute Mining surged as much as 16.1 per cent, its biggest intraday gain in three years and was the top gainer on the benchmark.

The heightened trade war fears also bolstered demand for shares of rare earths miner Lynas Corp, which saw its best day since May 31.

Earlier in the day, Lynas said it was conducting preliminary work on a waste disposal facility for its Malaysian plant, which is due for an operating licence renewal in September.

Elsewhere, Australia's largest bulk grain handler GrainCorp dropped to an eight-week trough after flagging its first annual loss in a decade.

Financials also declined, with No.2 lender Australia and New Zealand Banking Group seeing its worst day in a month.

Meanwhile, New Zealand's benchmark S&P/NZX 50 index declined 0.4 per cent, or 37.68 points, to 10,823.14.

Losses were dominated by locally-listed Australia and New Zealand Banking Group, which slid 2.6 per cent, its sharpest intraday fall since May 17.

REUTERS