A wild morning saw stocks swing through a 116-point range amid confusion about the US’s trade deal with China.
Stocks gave up early gains, turning firmly lower after a White House adviser told Fox News the trade deal was “over”. The interview triggered a plunge in US index futures, dragging Australian stocks with them.
The S&P/ASX 200 slumped 62 points into the red in minutes before recovering to reach mid-session ten points or 0.2 per cent ahead after trade adviser Peter Navarro backed away from his initial comments and President Donald Trump tweeted the deal was “fully intact”.
The dollar collapsed from above 69.2 US cents to 68.6 US cents and back again, lately buying 69.23 US cents. S&P 500 index futures were lately flat. Dow futures were steady after falling more than 250 points.
Navarro dropped the bombshell on Fox News, telling the president’s favourite news outlet, “It’s over”. Navarro, a vocal critic of the leadership in Beijing, accused the Chinese of concealing the COVID-19 virus breakout. “They came here on January 15th to sign that trade deal, and that was a full two months after they knew the virus was out and about,” he said. “China lied, Americans died,” he added.
The market recovered after the Wall Street Journal reported Navarro said his comments did not refer to the Phase One trade deal and he was trying to make a broader point about trust. President Trump tweeted that the deal was intact and expressed his hope the Chinese would honour the terms.
Asian markets quickly rebounded. China’s Shanghai Composite improved 0.1 per cent, Hong Kong’s Hang Seng 0.9 per cent and Japan’s Nikkei 0.8 per cent.
Earlier, the ASX 200 flirted with the 6000 level as gains in tech and mining stocks helped the index inch higher for a third session. The benchmark index hit an early high at 5999.2 before the rot set in. Today’s peak was the highest in eight sessions following several days of sideways action as investors mull a rise in global COVID-19 infections.
The market took its initial cues from a positive night in the US, where strength in tech lifted the Nasdaq 1.11 per cent to a new closing high. The broader S&P 500 put on 0.65 per cent.
The heavyweight financial sector led the reversal as CBA declined 0.7 per cent, ANZ 0.5 per cent, NAB 0.8 per cent and Westpac 0.9 per cent. Fund manager Challenger plunged 8.7 per cent after raising $270 million from institutional investors. AMP advanced 8.8 per cent after securing all the regulatory approvals needed to sell its AMP Life division to Resolution Life.
Energy stocks followed crude oil lower. Oil Search shed 0.9 per cent, Santos 0.5 per cent and Woodside 0.4 per cent. Brent crude was last down seven cents or 0.2 per cent at $US43.04 a barrel after sinking as low as US$42.23.
Resource stocks exposed to Chinese demand pushed back towards their morning highs. BHP advanced 1 per cent, Fortescue 1.1 per cent and Rio Tinto 1.4 per cent. Western Areas surged 17.8 per cent after releasing encouraging results from its Western Gawler Project in South Australia.
Qube Holdings gained 7 per cent after signing a deal to develop huge new warehouses for Woolworths. Cromwell Property Group climbed 8.6 per cent following a takeover offer from asset manager ARA. The board described the offer as “unsolicited and opportunistic”, and advised shareholders to take no action.
Gold gave up its gains as the trade storm blew over. The precious metal was last down $5.40 or 0.3 per cent at $US1,761 an ounce.
What’s hot today and what’s not:
Hot today: Shares in Kalamazoo Resources (ASX:KZR) hit a four-month peak on news the company had acquired a Pilbara gold project. Kalamazoo said it would acquire the “highly prospective” Ashburton gold project in WA from Northern Star Resources. Payment will be $5 million for the first 250,000 tonnes of ore mined, plus a 2 per cent net smelter royalty for the first 250,000 ounces of gold produced and a royalty of 0.75 per cent on any subsequent gold produced. The share price soared 40.2 per cent.
Not today: Greater clarity on the revenue impact of COVID-19 did not translate into share price gains for mining services company Perenti Global (ASX:PRN). The share price slid 1.5 per cent after the company said it now expects underlying net profit after tax of $106 – $110 million. The company abandoned previous guidance of $115 – $120 million back in March while it assessed the impact of the virus on its operations. A deferred dividend payment of 3.5 cents was brought forward to next month.