Headline indices of the Australian equity market were lower on Tuesday, 25 June 2019, as investors kept a cautious stance ahead of an expected meeting between U. S. President Donald Trump and Chinese President Xi Jinping at the upcoming G-20 summit in Japan. Meanwhile, risk sentiments were dampened on geopolitical tensions after the U. S. on Monday imposed sanctions on Iran over the latter’s shooting down of an unmanned American drone last week. Around late afternoon, the benchmark S&P/ASX200 index dropped 6.94 points, or 0.1%, at 6,658.50 points, while the broader All Ordinaries sank 9.16 points, or 0.15%, at 6,736.30.
The main event this week (Fri-Sat) is the G20 meeting in Japan and in particular the potential meeting between Presidents Donald Trump and Xi Jinping on the sidelines. The two leaders are expected to discuss the protracted trade fight between their two countries. China and the U. S. have already slapped tariffs on billions of dollars worth of each other’s goods over the past year. In May, the two economic powerhouses hiked tariffs targeting some goods. The Trump administration has said previously that Trump is ready to raise tariffs on all Chinese imports into the U. S. if the two countries fail to arrive at a deal.
China’s Ministry of Commerce said in a statement on Tuesday that the country’s Vice Premier Liu He had a phone call with U. S.
Secretary Steven Mnuchin and U. S. Trade Representative Robert Lighthizer on Monday. They discussed trade and agreed to maintain communications, according to the statement.
Meanwhile, the U. S. on Monday imposed sanctions on Iran over the latter’s shooting down of an unmanned American drone last week. Tensions between the two countries have remained high since a recent attack on oil tankers near the Strait of Hormuz.
Financials were major drag n the benchmark index, with the big four banks led losses. The industrial and utilities sectors were also underperformed while materials and consumer staples were among the strongest advancing sectors.
The gold sub-sector experienced the largest percentage advances as miners of the precious metal benefit from gold prices trading at the best levels since August 2013 on geopolitical tensions and expectations of lower US interest rates driving demand. Saracen Minerals (SAR) gained 6.5% while St Barbara (SBM) was up 4.8% and Regis Resources (RRL) was 2.3% higher.
Mining services firm Ausdrill (ASL) continued its recent run of gains and following its 10.5% improvement yesterday on the signing of a 5 year A$800 million contract at a Botswanan copper mine.
Metcash (MTS) declined another 4.75% after falling 9.8% on Monday, as the wholesale distributor to retail chains such as IGA supermarkets and hardware store Mitre10 announced an underwhelming set of numbers for its FY19 earnings result yesterday. Underlying profit was lower and impacted by a 3% decline in earnings at its food division.
CURRENCY NEWS: The Australian dollar inclined against the U. S. dollar on Tuesday. The Australian dollar changed hands at $0.6963 after rising from levels below $0.695 in the previous session.
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