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The Australian share market slumped to a two-year low, weighed down by the major banks as hopes for a trade resolution between the US and China continue to dissipate.
The benchmark S&P/ASX200 index was down 129 points, or 2.27 per cent, at 5552.5 on Monday, while the broader All Ordinaries fell 2.26 per cent.
The positive sentiment from the temporary truce struck at the G20 summit between US President Donald Trump and his Chinese counterpart Xi Jinping has faded, CommSec market analyst James Tao said.
This was compounded by weaker than expected November import and export trade data out of China as well as the escalation of hostilities between the two superpowers after the arrest of a senior executive of Chinese electronics giant Huawei.
"After the G20 it was looking like there was a road to some kind of truce, but as we've progressed it feels like there's less certainty on what both countries have actually agreed to at the summit," Mr Tao told AAP.
Internet and technology shares took the biggest hit during a broad sell-off on Wall Street on Friday, with the benchmark S&P 500 index posting its biggest weekly percentage drop since March.
ASX tech stocks followed suit, with Afterpay Touch tumbling 5.7 per cent to $11.97, while Wisetech Global, Altium and Xero lost between four and 4.8 per cent.
But the financials were the heaviest drag with ANZ suffering the biggest loss of the big four lenders, down 4.2 per cent to $24.64, Westpac and Commonwealth fell 3.4 and three per cent respectively, and NAB slipped 2.5 per cent to $23.39.
Macquarie's shares fell three per cent to $109.89 and Bank of Queensland was 3.2 per cent lower as it scrapped the $65 million sale of its St Andrew's Insurance business to the beleaguered Freedom Insurance Group.
The health care sector fell 3.7 per cent, dragged down by benchmark CSL, losing nearly four per cent to $176.64, and Cochlear, losing nearly five per cent to $165.73.
Consumer stocks were once more in the doldrums against a backdrop of worries over spending and the energy sector fell despite oil prices edging higher on an OPEC-led cut, dragged down by New Hope and Soul Pattinson losing 3.7 per cent and 3.9 per cent respectively.
Oil Search, Woodside and Santos all eked out a gain, however.
Materials lost ground as South32, Rio Tinto and BlueScope all lost ground, but BHP rose 0.4 per cent to $31.29.
Gold miners were more consistent after prices surged to a five-month peak, with Northern Star up 2.7 per cent to $8.42, and Regis Resources rose 5.2 per cent.
The Aussie dollar recovered ground after it had threatened to hit a six-week low against the US dollar, but was still just 72.17 US cents at 1630 AEDT compared to 72.29 on Friday.
ON THE ASX:
* The benchmark S&P/ASX200 index closed down 129 points, or 2.27 per cent, at 5552.5
* The All Ordinaries was down 130.4 points, or 2.26 per cent, at 5627.5
* At 1630 AEDT, the SPI200 futures index was down 117 points, or 2.06 per cent, at 5550
CURRENCY SNAPSHOT AT 1630 AEDT:
One Australian dollar buys:
* 72.17 US cents, from 72.29 US cents on Friday
* 81.17 Japanese yen, from 81.63
* 63.13 euro cents, from 63.56
* 56.61 British pence, from 56.61
* 104.72 NZ cents, from 105.05
GOLD:
The spot price of gold in Sydney at 1630 AEDT was $US1249.15 per fine ounce, from $US1239.41 on Friday.
Wall Street fell for a fourth straight day on Monday, sending the S&P 500 to an eight-month low, with banks, energy and health stocks leading losses on mounting worries over global growth, the U.S.-China trade war and uncertainty over Brexit.
But the S&P and Dow Industrials, which have already lost all their gains for the year in a 4.5 percent slide last week, came off their session lows. The bounce came as Apple’s shares sharply cut their losses, which also helped the Nasdaq reverse course and post slight gains.
Markets have been dogged by signs of cooling global growth, concerns over interest rates and worries that escalating tensions between the United States and China could scuttle a fragile trade truce.
“You have political tensions with China, the potential for slowing global growth, and other geopolitical tensions, that continue to weigh on the markets,” said Charlie Ripley, senior investment strategist for Allianz Investment Management in Minneapolis.
Eight of the 11 major S&P sectors were lower. The biggest drag was a 1.85 percent drop in financials as U.S. Treasury yields dropped further on worries over U.S.-China trade conflict and the Brexit turmoil.
British Prime Minister Theresa May said she was delaying a planned vote in parliament on her Brexit deal as it was set to be rejected “by a significant margin”.
The rate-sensitive bank stocks tumbled 2.56 percent on worries that Brexit could hamper global growth, giving the Federal Reserve more reason to slow its pace of interest rate hikes.
“If the Fed is slowing, that means economic activity is below normal and that can negatively impact earnings,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
Apple Inc was trading slightly higher, having erased its losses after Qualcomm Inc said it had won a preliminary order from a Chinese court banning the import and sale of several iPhone models in China due to patent violations.
Qualcomm rose 1.9 percent, and along with Apple and Microsoft Corp, helped push the technology index 0.51 percent higher.
At 1:23 p.m. ET, the Dow Jones Industrial Average was down 172.18 points, or 0.71 percent, at 24,216.77, the S&P 500 was down 14.22 points, or 0.54 percent, at 2,618.86 and the Nasdaq Composite was up 4.75 points, or 0.07 percent, at 6,974.00.
The small-cap Russell 2000, which is less sensitive than its larger peers to global worries such as trade, fell 0.61 percent and was 18.3 percent below its record closing high on Aug. 31.
The health index, which is the best performing S&P sector this year, fell 0.65 percent. Energy stocks retreated 2.38 percent, the most among the 11 S&P sectors as oil prices fell.
Declining issues outnumbered advancers for a 3.12-to-1 ratio on the NYSE and a 1.92-to-1 ratio on the Nasdaq.
The S&P index recorded no new 52-week highs and 90 new lows, while the Nasdaq recorded four new highs and 343 new lows.
Futures not looking too bad
Source: Netwealth Morning Business Roundup
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