Trade Tension Drags Down Australian Stock Exchange Shares

Recently, Australian stock exchange weighed down by an escalation in trade tensions between the United States and China.

Moreover, the political uncertainty bordering Donald Trump sharply decreases commodity prices. Australian shares also fell for the second consecutive session.

Since the start of September, it is already recording the first back-to-back waning.

The benchmark S&P/ASX 200 index slipped 38.7 points, or 0.6 percent, to 6710.2. It was the weakness throughout the energy sector that dragged down resources and telecommunications.

The energy sector plunged 1.6 percent, following a massive decline in crude petroleum prices overnight. This is together with base and bulk commodity prices weakening.

Meanwhile, the materials sector was also under pressure, falling to 1.2 percent.

Despite the continued drop in bond yields, telecommunications also suffered a challenging session with a decrease of 1.6 percent.

Elsewhere, the losses fluctuated from 0.2 to 1 percent. Financials, the largest component in the index by market weighting, dropped 0.3 percent.

There were some pinches of resistance, most notably from information technology while most sectors finished in the low.

Touches of Retaliation 

Afterpay Touch soared 13.3 percent to $36.00, closing at the highest close on record.

In addition, shares in the buy now, pay later provider supported a broker upgrade from Goldman Sachs.

Along with the tech sector, profits of 0.4 and 0.6 percent correspondingly from REITs and services assisted in lessening the decline for the broader index.

This year, global bond yields also have fallen sharply. They were hitting unmatched slumps in some circumstances, including in Australia.

Shane Oliver, the AMP Capital’s head of investment strategy and chief economist, indicated that “the continued decline in yields, not only this year but over recent decades, has proven to be a boon for growth assets over this period.”

In a note, Mr. Oliver also said, “Shares and growth assets have literally climbed a wall of worry this decade with a revolving door. They are a list of worries around public debt, the Eurozone, deflation, inflation, rate hikes, Trump, North Korea, China, trade wars, growth and house prices,”

Lastly, “But returns benefitted from the recovery after the GFC, and a search for yield as interest rates have collapsed depressing yields on most assets,” he said.