Australia: Stocks flat as trade worries offset earnings boost

[BENGALURU] The mining sector weighed on Australia's benchmark stock index on Monday, offsetting any boost from upbeat domestic corporate earnings while doubts about Sino-US trade talk progress also kept sentiment subdued.

US President Donald Trump poured cold water on the prospect of a trade deal on Friday, saying Washington would continue talks with Beijing but was not going to make a deal for now.

While the comments may have not taken investors by surprise, the uncertainty over what comes next in the trade war pushed the S&P/ASX 200 index 0.4 per cent lower in early trade. It reclaimed these losses by 0149 GMT to trade flat as investors turned their attention to upbeat earnings. The benchmark had closed 0.3 per cent higher on Friday.

"It's a holding pattern," said Mathan Somasundaram, a Blue Ocean Equities market portfolio strategist, citing negative global macro pointers.

Electronics retailer JB Hi-Fi Ltd beat its own annual profit guidance, sending its shares rocketing to a record high. Retailers have struggled recently as consumer spending tightened but recent back-to-back interest rate cuts are likely to help boost sentiment.

Rubber glove maker Ansell flagged a stronger 2020 outlook despite a drop in profit. Its shares jumped as much as 7.1 per cent.

Retail-focused companies Wesfarmers and Woolworths also posted minor gains, rising 0.4 per cent and 0.5 per cent, respectively.

"We've had two rate cuts, so I don't think anyone is surprised that retail and property will hold up. Now, the question would be what happens going forward," Mr Somasundaram said.

The mining index offset the tailwind from upbeat earnings, with major iron ore miners Rio Tinto and Fortescue Metals Group sliding.

Rio was down as much as 3 per cent to its lowest level in more than six months, while Fortescue fell about 3.3 per cent. Iron ore prices, which have surged this year, posted their biggest weekly drop in over 16 months on Friday.

New Zealand's benchmark S&P/NZX 50 index fell 0.2 per cent, or 23.53 points, to 10,849.68.

Fonterra dropped 4.8 per cent after saying it would not pay a dividend this year and that it was on track to post an annual loss of as much as NZ$675 million (S$604 million) due to a series of write-downs.

REUTERS