stockmarket

Australian shares dragged down to a four-month low


Australia’s sharemarket has hit a four-month low as the escalating trade war between the United States and China and Europe, as well as heavy losses in local bank and health stocks, drag the market down.

The ASX200 – which tracks the 200 biggest publicly-listed companies in Australia – has lost 2.25% in value since Friday, having endured its worst one-day performance in seven months on Monday, with the losses extending into Tuesday.

The benchmark S&P/ASX200 closed Tuesday on 6,041 points, down from 6,100.3 points on Monday.

The sharemarket is now sitting 24 points lower than at the start of the year.

Analysts say there are multiple reasons why the share market is suffering broad-based declines recently, including rising global trade tensions, falling commodity prices and concerns about the banking royal commission.

Health stocks lost value on Tuesday after the terms of reference for the aged care royal commission were released.

It comes as the International Monetary Fund cuts its official growth forecast for the global economy for the first time since July 2016 on Tuesday.

Only three months ago, the IMF had been projecting the global economy would grow at an annual rate of 3.9% this year and next, but it cut that projection to 3.7% for both years.

IMF officials said Donald Trump’s trade war with China and Europe would likely hit global growth and reverberate through 2019. The escalation of the US president’s protectionist policies, which had resulted in the world’s largest economy doubling import duties on some Chinese goods, would negatively affect the growth of the world’s largest trading countries, including the US, France, Germany and China.

Britain was expected to suffer slower growth against a backdrop of trade conflicts, though Brexit uncertainty continued to inflict the most harm to the UK’s outlook for expansion this year and next, IMF officials said.

The IMF said that even without a further deterioration in US and China relations, the global economy would grow this year at 3.7% and at the same rate in 2019 compared with the 3.9% it predicted in April.

On Tuesday, Australia’s share market was also weighed down by health and bank stocks.

After Commonwealth Bank announced plans to investigate advice fees it had charged dead customers – a controversy exposed in the banking royal commission – and pledged to rebate $20m worth of grandfathered commissions to customers, CBA shares lost 0.87%.

Cochlear lost a further 5.2% in value, closing at $191.88 a share, on news that Bose had invented a hearing aid that patients can control with a smartphone. CSL shed 4.5% to close at $188.21 a share, its lowest since mid-June.

The Australian dollar is also continuing its year-long slide, having weakened from US80.9c in January to roughly US70.77 this week.



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