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Australia shares sink to two-year lows; NZ down

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[BENGLAURU] Australian shares fell sharply near two-year lows on Monday, tracking a global sell-off in riskier assets on mounting worries about slowing global growth and Sino-US trade tensions.

Concerns over the trade dispute between US and China and interest rates gave European shares their worst week of losses in two months and sank US stocks on Friday.

The S&P/ASX 200 index fell as much as 1.9 per cent in early trade to its lowest level since December 2016, before trimming some losses to trade 97.3 points down at 5,584.20 by 0037 GMT.

Worries over Sino-US tensions flared last week on news that China's Huawei Technologies's chief financial officer had been arrested in Canada, at Washington's behest.

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The arrest came as the US and China started 90 days of negotiations that will determine if they can step back from a bruising trade war.

China on Sunday demanded United States should withdraw the arrest warrant on Huawei global CFO Meng Wanzhou, who faces extradition to the US, which alleges that she covered up her company's links to a firm that tried to sell equipment to Iran despite sanctions.

Weak US job data on Friday and the Huawei arrest have kept the markets jittery, said Caleb Weng, research analyst at Australian Stock Report.

Almost all the major sector indexes were trading in the red, with only the metals and mining index and the gold index logging in gains.

Australia's top lenders - the "Big Four" - were all trading lower with Commonwealth Bank of Australia falling as much as 2.9 per cent to a near three-week low, while Australia and New Zealand Bank fell as much as 3 per cent.

The Westpac Banking Corp and National Australia Bank slid down as much as 3.2 per cent and 2.4 per cent, respectively.

The energy index fell up to 1.6 per cent to a near nine-month low with WorleyParsons losing more than 4 per cent to become the top percentage loser on the index.

Healthcare and technology stocks, both having high exposure to the US markets, too felt the heat.

The Aussie healthcare bellwether CSL lost as much as 3 per cent in early trade, while online payments firm Afterpay Touch Group topped the percentage losers among technology shares, slipping up to 6.5 per cent.

Also dampening investor sentiment, China reported far weaker than expected November exports and imports, showing slower global and domestic demand and raising the possibility authorities will take more measures to keep the country's growth rate from slipping too much.

November exports only rose 5.4 per cent from a year earlier, Chinese customs data showed on Saturday, the weakest performance since a 3 per cent contraction in March, and well short of the 10 per cent forecast in a Reuters poll.

China is Australia's No.1 trade partner and any slackness in the world's second largest economy will be felt heavily Down Under.

The metals and mining stocks, however, bucked the trend, gaining as much as 1.4 per cent. Index heavyweight BHP Group advanced up to 2.2 per cent while another major Rio Tinto gained as much as 0.8 per cent.

"The metal index has come off signicantly within the last quarter and a little bit of noise and recovery was on table," said Mr Weng attributing the gains to short covering by investors.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index wasn't spared as the index fell 0.8 per cent or 72.2 points to 8,695.17.

Diary giant a2 Milk Co was the top percentage loser, falling as much as about 5 per cent.

REUTERS