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The share market looks likely to extend yesterday’s heavy fall after a possible delay to a trade deal pulled Wall Street off record levels.

ASX SPI200 index futures eased 10 points or more than 0.1 per cent to 6707. The benchmark Australian index, the ASX 200, yesterday plunged 92 points or 1.4 per cent to its biggest loss in seven weeks.

US stocks stumbled after Reuters reported that the much-delayed ‘phase one’ trade deal with China may not be completed this year. The share market hit record levels earlier this week on signs that negotiators were close to an interim deal that would address some of the White House’s grievances with its trading partner. A further round of US tariffs is due to kick in on December 15.

A broad sell-off saw the S&P 500 close 12 points or 0.38 per cent in the red. The Dow gave up 113 points or 0.4 per cent and the Nasdaq 44 points or 0.51 per cent.
Trade bellwethers Caterpillar, Apple and computer chipmakers declined.

Trade negotiations have stalled once again on Chinese demands for tariff relief without progress on core US issues such as the protection of intellectual property and forced technology transfers. The target date for an interim deal passed earlier this month. Reuters said unnamed “trade experts and people close to the White House” now say negotiations may stretch into next year.

The trade headlines overshadowed news that US rates are on hold for the immediate future. The minutes from the last Federal Reserve meeting said rates “likely would remain” where they are “as long as incoming information about the economy did not result in a material reassessment of the economic outlook”. At the meeting, the central bank lowered its overnight lending rate by 25 basis points to a range of 1.5 – 1.75 per cent, the third cut of the year.

The ASX yesterday suffered its biggest hit since early October, losing its grip on a three-month high after financial intelligence agency Austrac launched civil proceedings against Westpac. The charges include breaches of anti-money laundering and terrorism financing legislation. The financial sector tumbled as investors factored in the danger of further action as government regulators adopt a harder stance since the Royal Commission.

Energy stocks should see a boost this morning following a rebound in oil. Brent crude settled $1.49 or 2.5 per cent higher at $US62.40 a barrel, reversing Tuesday’s fall after a report showed US stockpiles increased less than expected last week.

Mining heavyweights BHP and Rio lost ground here yesterday and continued south in overnight action. BHP’s US-listed stock sagged 1.76 per cent and its UK-listed stock 0.8 per cent. Rio Tinto lost 2.6 per cent in the US and 1.63 per cent in the UK. Iron ore rose for a seventh session, the spot price at Tianjin edging up 80 cents or 0.9 per cent to $US86.65 a dry ton.  

A modest cut to China’s benchmark lending rate helped raise copper to its highest level in a week, but the rally dissipated by the close. Copper on the London Metal Exchange reached $US5,905.50 a tonne before ending flat at $US5,875. Lead lost 0.3 per cent, nickel 2.2 per cent and zinc 1.3 per cent. Aluminium improved 0.6 per cent and tin 0.3 per cent.

Gold closed barely changed, then edged lower as traders weighed the trade news against the pause in rates. Gold for December delivery settled 10 cents or less than 0.1 per cent lower at $US1,474.20 an ounce and was lately down another $1.20 or 0.1 per cent at $US1,473.10.

The dollar slid two-fifths of a cent to 67.99 US cents.

The domestic economic calendar is clear today, but AGM season is in full flow. A round of manufacturing reports from around the globe is a likely highlight over the next 24 hours. Wall Street has data due tonight and tomorrow, Australia tomorrow morning and Europe tomorrow night.

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