ASX Gives Up 2.7% Over Volatile Week

By Glenn Dyer | More Articles by Glenn Dyer

The ASX looks like starting the week on a weak note today after Wall Street ended in the red on Friday with a small loss, thanks to another round of hot-headed commentary on the China trade war from President Trump.

Trump seemed to say on Friday that he may not be interested in keeping talks with China going next month.

Eurozone shares fell 1.2% on Friday and the S&P 500 fell 0.7% after President Trump’s comments.

Following the soft global lead, ASX 200 futures fell 22 points or 0.3% on Friday night pointing to a soft opening here later this morning.

The Aussie dollar ended under 68 US cents and the yield on the key 19 year bond fell under 1% for the first time ever late last week (which is where the Reserve Bank’s cash rate is at the moment) and ended at 0.95%.

Iron ore prices closed the week with a small gain on Thursday (there was no offshore trading because of a holiday in Singapore where the deals are booked). The price still fell 13% for the week to close just over $US94 a tonne.

The ASX 200 Index fell 184.2 points, or 2.7%, to 6584.4 last week while the All Ordinaries lost 182.7 points, or 2.7% to close at 6663.4.

The reason for the big slide was the sharp falls on Monday and Tuesday after the Chinese yuan breached the psychological seven per US dollar mark for the first time in years.

Despite finishing the week with three positive sessions on the back of an aggressive 0.5% rate cut from the Reserve Bank of New Zealand on Wednesday, the market still closed lower by the end of the week.

The big miners led the market slide: BHP Group shares fell 4.1% to $37.20, Rio Tinto lost 4.2% to $87.64 and Fortescue Metals Group slid 5% to $7.26.

The major banks were also weaker. Commonwealth Bank shares fell 2.9% to $79.49 (The 2018-19 profit did not impress some analysts), NAB slid 3.1% to $27.63, ANZ fell 2.7% to $27.03 and Westpac shares lost 2.1% to $28.22.

Tech stocks though took a hammering. Appen shares dived 15.4% to $25.42, WiseTech Global lost 14.1% to $27.39, Altium lost 7.3% to $33.08, Afterpay Touch shares lost 5.2% to $24.17 and Xero shares shed 7% to $61.06.

Earnings season kicked off this week.

Insurance Australia Group slid 8.9% to $7.70 after posting a profit fall and lower dividend while AGL Energy dropped 5.9% to $19.25 after flagging a weaker year ahead (which had been known since late June).

AMP shares firmed 5.7% to $1.94 after outlining its new strategy, completing a $650 million equity raise and revising the sale of its life business and trying to meet objections from regulators.

In rare good news for the building sector, James Hardie shares rose 9.2% to $21.61 after forecasting an improved outlook on Friday.

With gold cracking and staying over $US15,000 an ounce listed gold stocks had a good week.

Newcrest Mining shares rose 5.5% to $38.67, Northern Star Resources jumped nearly 6% to $13.30, Evolution Mining climbed 6.2% to $5.47, Regis Resources shares were up 8.8% as were shares in St Barbara and Resolute Mining shares added 7.3 by Friday.

Gold stocks should not lose ground today after the Comex price was all but steady on Friday in New York.

Investors will be closely watching the setting of the new rate for the Chinese Yuan later this morning. That could be the biggest influence on the markets here and in the rest of Asia today.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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