$45bn wiped off ASX with 2.2pc drop on US trade and tariff fears

Australian stocks clocked their worst session since August, with a 2.2 per cent drop, wiping $45bn from the local market.

There was little to celebrate on the local market.

Australian stocks had their worst day since August, as more than $45bn of market value was wiped from the bourse, with more than 95 per cent of stocks in negative territory.

A weak US lead was exacerbated by reports that the US was considering tariffs on Brazil, Argentina and France and amid uncertainty of the progress in trade negotiations with China.

Then, in a final blow to the bourse, the Reserve Bank communicated a wait-and-see message on monetary stimulus, holding rates at historic lows of 0.75 per cent and sending shares to a low of 6703.7.

By the close, the ASX 200 was lower by 150 points, or 2.2 per cent, at 6712.3, with only eight stocks managing to edge higher out of the top 200.

Meanwhile, the All Ords finished down 147 points, or 2.1 per cent, at 6818.4.

In the broader picture, with markets recently hitting record highs, the decline does little to dent the near 17 per cent rally in the market over the past 12 months.

“The market reaction to Tuesday’s meeting saw a lift in the AUD/USD as markets lowered the chance of a rate cut in February,” CBA economist Belinda Allen said.

“This was likely in response to the line: ‘given these effects of lower interest rates and the long and variable lags in the transmission of monetary policy, the board decided to hold the cash rate steady at this meeting while it continues to monitor developments, including in the labour market’.”

“We see the RBA taking time to assess the rate cuts delivered in June, July and October, but we continue to expect another easing in February 2020.”

The RBA decision gave a slight boost to the Aussie dollar, which finished the local session higher by 0.43 per cent to US68.47c.

To equities, and there was little to celebrate on the local market.

Financials fell hard led by a 2.6 per cent drop in Commonwealth Bank to $79.34.

Westpac fell by 1.3 per cent to $24.29, ANZ slumped by 1.1 per cent to $24.72 and NAB dropped 1.8 per cent to $25.43. New National Australia Bank boss Ross McEwan has told staff consultants Bain & Company will assist in a three-to-four month review, as he works out the next leg of the bank’s strategy.

AMP fell by 3.8 per cent to $1.88 as the AFL dropped it as its super manager.

In the major miners, BHP wound back by 1.4 per cent to $37.70, Rio Tinto gave back 0.5 per cent to $97.02 and Fortescue lost 1.5 per cent to $9.87.

Caltex rejected an $8.6bn takeover bid from Canadian outfit Couche-Tard, but it joined the decline with shares down 0.8 per cent to $34.49 by day’s end.

Santos edged lower by 0.62 per cent despite upgrading its production guidance at its investor day.

The gas producer outperformed the rest of the energy market, despite expectations of the extension of output cuts at the OPEC meet later this week.

Oil Search lost 2.7 per cent to $7.10, Origin dropped 1.7 per cent to $8.57 and Beach Petroleum slipped by 3.7 per cent to $2.34.

Meanwhile, Woodside said it expected to sign off on a final investment decision for its Senegal oil project by the end of the month. Its shares finished lower by 1.6 per cent to $33.68.

Grocery distributor Metcash was out of favour after confirming a $237m write down in the first half after 7-11 announced it wouldn’t renew its supply agreement next year. The stock closed the session lower by 1.4 per cent to $2.91.

The consumer discretionary sector was the worst performing, down by 3.3 per cent led by a 3.9 per cent drop in Blackmores to $78.93.

Woolworths lost 3.4 per cent to $38.43, Wesfarmers slipped by 2.6 per cent to $41.23 and Coles dropped by 4.2 per cent to $15.67.