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Australia: Shares in red as Sino-US tensions flare


[BENGALURU] Australian shares fell more than 1 per cent on Monday, extending losses into a fourth session, with mining stocks hit the most after an escalation in Sino-US trade tensions raised concerns about the global economic growth outlook.

Risk markets have suffered since US President Donald Trump abruptly said last week that the United States would slap 10 per cent tariffs on US$300 billion of Chinese goods, ending a month-long trade truce and prompting China, Australia's top trading partner, to warn it would retaliate.

The S&P/ASX 200 index was 1.2 per cent, or 81.1 points, lower at 6,687.5. It fell 0.3 per cent on Friday.

"Given the pressure and the nervousness towards the end of last week about (the) growth outlook, ... it is no surprise seeing cautious trading and pressure on the market ahead of all the economic events," said Michael McCarthy, chief market strategist at CMC Markets.

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The central banks in Australia and New Zealand review interest rates this week, and China is expected to issue July trade and inflation data.

ANZ Research said in a note it no longer expected the Australian central bank to cut interest rates, though easing in coming months was likely. A 25-basis-point cut from New Zealand "is certain," the note said.

Australia's mining stocks fell as much as 2.4 per cent, as iron ore and copper prices dropped sharply on concerns the escalation in the US-China trade war will dampen demand.

The world's biggest miner, BHP Group, lost as much as 3.1 per cent as it fell to its lowest level in nearly two months, while Rio Tinto hits its weakest level in three months.

Rare earths miner Lynas Corp was set for its worst session in five weeks on reports of new hurdles to obtaining a licence permit for its Malaysian plant, its latest in a long-running tussle with the Southeast Asia country over how to deal with radioactive waste at the plant.

Oil-and-gas companies also weakened, with Santos Ltd and Woodside Petroleum giving up 0.5 per cent and 1 per cent, respectively.

Oil Search bucked the trend, gaining as much as 4 per cent after the Papua New Guinea government signalled its backing for a liquefied natural gas deal with French oil major Total SA. Oil Search is a partner in the project.

Property stocks such as Stockland Corporation and WFD Unibail Rodamco NV also climbed, as much as 1.1 per cent and 2.4 per cent, respectively.

Mr McCarthy attributed this to the defensive nature of these stocks amid a "clear focus on steady earnings streams."

In New Zealand, the benchmark S&P/NZX 50 index ticked down 0.6 per cent to 10,800.14 at 0156 GMT.

Dairy products maker A2 Milk led losses, giving up as much as 2.2 per cent.