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The Aussie share market was subdued by the dramatic events unfolding in the east as China attempts to tighten its grip of power over Hong Kong.
The Chinese government revealed in a press conference yesterday it would be introducing new “sedition laws” to wipe out protests in Hong Kong. The surprise moved sparked backlash from the US, with President Donald Trump threatening to address the issue “very strongly”. Bipartisan laws are being drawn up to sanction Chinese officials if the proposed bill comes to pass.
With last year’s trade war between the US and China and Wednesday’s Twitter tirade against the country from President Trump, tensions are high between China and the US, and Asian markets opened sour today.
By the time the ASX closed for the weekend, Hong Kong’s Hang Seng index was 5.08 per cent lower. The Asia Dow was down by 2.23 per cent and Japan’s Nikkei 225 by 0.86 per cent.
In response to the weak open across Asian markets, our ASX 200 index steepened its own decline to close down by 0.96 per cent. The closing figure of 5497 points is still nearly 100 points up for the week, however. The index has recovered over 20 per cent of its value since its March COVID-19 slump.
Exacerbating the losses from the Asian worries was a decline in oil prices, causing our energy sector to anchor the market today. Santos led the losses with a 3.97 per cent decline, while Woodside lost 2.21 per cent, Origin 2.34 per cent, and Oil Search 2.72 per cent.
The big players in our materials sector who have a hand in the oil game widened the losses. BHP declined by 0.55 per cent and Rio Tinto by two per cent. Fortescue Metals lost with 0.15 per cent. Altogether, the sector lost 0.73 per cent.
It’s become remiss to talk about the wider materials sector without making mention of our darling gold stocks. Today, however, was nothing to write home about. While Northern Star posted a 0.70 per cent gain but Newcrest offset the win with a 0.54 per cent loss. Saracen followed suit, losing 2.88 per cent.
Our other market heavyweight, the financials sector, added to the day’s woes. NAB lost 1.16 per cent today and Westpac 1.05 per cent. ANZ lost 1.04 per cent with Commonwealth Bank bringing up the rear and losing 0.59 per cent. Investment banking giant Macquarie Group lost 1.29 per cent.
It was a similarly weak day for health care stocks, with the sector declining 2.04 per cent. Biotech giant CSL lost 2.36 per cent and hearing aid specialist Cochlear lost 1.43 per cent. Ramsay Health Care lost 1.26 per cent, Fisher and Paykel 1.66 per cent, and Sonic 0.80 per cent.
The Aussie dollar is slightly weaker again today, currently buying 65.34 US cents, 53.53 pence, and 11.56 South African Rand.
Today’s ups and downs
In an unusual share price movement, biopharma company Invex Therapeutics (ASX:IXC) saw a healthy spike after announcing a nicely-discounted capital raise. The company recently revealed strong results from a Phase II trial testing a repurposed diabetes drug, Exenatide, for treatment against high skull pressure. The company then raised $26.2 million to fund future trials by placing new shares at $1.30 each. With the excitement of the trial success and a $5 million take-up from Andrew Forrest’s Tattarang, shares in IXC gained 11.37 per cent today to close worth $1.66 each.
It seems today’s losses were largely due to wider market sentiment rather than substantial news. For example, CPT Global (ASX:CGO) lost 23.1 per cent despite having no new market releases since early May. Similarly, 8VIC (ASX:8VI) slumped 16.7 per cent despite staying quiet since its April quarterly report.
