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08/05/19
       
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The Australian share market closed slightly higher on Tuesday, having given up some of its gains following the Reserve Bank's decision to keep rates on hold for a record 33rd month.

The benchmark S&P/ASX200 index fell 30 points in the five minutes after the RBA's decision to close up 12 points, or 0.19 per cent, to 6295.7 points. The broader All Ordinaries was up 13.6 points, or 0.21 per cent, to 6,383.5.

The Aussie dollar had the opposite reaction, spiking against the US dollar. It was buying 70.35 US cents, from 69.91 US cents on Monday.

The mining sector had strong gains, up 1.33 per cent collectively, after a court in Brazil ordered Vale to halt operations at its Bructu iron ore mining complex, reversing a lower court's decision to allow it to reopen.

The company has been under intense scrutiny ever since a dam collapse at another one of its mines in Brazil killed hundreds of people in January.

A prolonged closure of the mine could cause another crunch in the supply of iron ore.

Prices for low grade ore spiked in particular, and Fortescue Metals, which mostly produces it, gained 6.29 per cent to $7.60 - making it the biggest gainer on the ASX200.

BHP gained 1.36 per cent to $37.30, South32 gained 1.82 per cent to $3.36 and Rio Tinto was up 2.25 per cent to $96.05.

The banking sector was down 0.27 per cent as a whole, with Commonwealth down 0.44 per cent to $74.61, Westpac down 0.18 per cent to $27.06, NAB down 0.31 per cent to $25.84 and ANZ down 0.18 per cent to $27.50.

GrainCorp was the biggest decliner on the ASX200, falling 6.96 per cent to $8.15 after Long-Term Asset Partners withdrew its takeover offer for the bulk grain handler.

Actinogen Medical crashed 68.75 per cent to 1.5 cents after the Sydney biotech company said two-year trial of its drug to treat Alzheimer's disease hadn't shown it worked any better than a placebo.

Landmark White shares dropped 26.32 per cent to 28 cents after they resumed trading from a near three-month suspension following a client data breach that cost the property valuation company at least $5 million in lost profit and led to the resignation of its CEO.

International Markets

US stocks slid on Tuesday as escalating trade tensions between the US and China triggered global growth fears and drove investors away from riskier assets.

The Dow Jones Industrial Average posted its second-biggest daily percentage drop of the year, while the S&P 500 and Nasdaq registered their third-biggest percentage drops, even as the major indexes pared losses to end off their session lows.

US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin said late on Monday that China had backtracked from commitments made during trade negotiations. Those comments followed President Donald Trump's unexpected statement on Sunday that he would raise tariffs on $200 billion worth of Chinese goods to 25 percent from 10 per cent.

Beijing said on Tuesday that Chinese Vice Premier Liu He will visit the US on Thursday and Friday for trade talks. Additional tariffs are set to take effect on Friday if a trade agreement is not reached by then.

Monday's comments from Lighthizer and Mnuchin raised concerns among some investors that trade talks between China and the US could take much longer to resolve than previously thought.

Investors expressed concern that additional tariffs, if imposed, could interrupt supply chains and hamper economic growth.

Trade-sensitive industrial and technology stocks marked the biggest percentage declines among the S&P 500's major sectors. All 11 sectors were in the red, with only utilities and energy falling less than 1 per cent.

Shares of Boeing Co, the largest US exporter to China, slipped 3.9 per cent, and shares of Caterpillar, another industrial stalwart sensitive to China, declined 2.3 per cent. Among technology stocks, Microsoft shares slid 2.1 per cent, while Apple Inc shares dropped 2.7 per cent. Apple and Microsoft were the top two drags on the S&P 500.

The CBOE Volatility Index, a gauge of investor anxiety, spiked to its highest level in more than three months.

The Dow Jones Industrial Average fell 473.39 points, or 1.79 per cent, to 25,965.09, the S&P 500 lost 48.42 points, or 1.65 per cent, to 2,884.05 and the Nasdaq Composite dropped 159.53 points, or 1.96 per cent, to 7,963.76.

In a bright spot, American International Group shares jumped 6.8 per cent after the insurer reported a quarterly profit that blew past expectations.

With earnings season now in its homestretch, first-quarter profits are now expected to rise 1.2 per cent, a sharp improvement from the 2.3 per cent decline expected at the start of the earnings season.

Of the 414 S&P companies that have reported earnings so far, about 75 per cent have surpassed analysts' estimates, according to Refinitiv data.

Conversely, Mylan NV shares tumbled 23.8 per cent, the most among S&P 500 companies, after the drugmaker reported lower-than-expected quarterly revenue and failed to provide greater clarity on a potential revamp of the company's strategy.

Source: Morningstar

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