As market participants are aware, stock markets are sensitive to overall health of the global economy and a weakness in the broader economy has the potential to disrupt the sentiments of market players. In the event of slowdown, investors generally decide to sell their equity holdings and they might decide to make deployments in safer asset classes. It looks like, in the current economic environment, the trade battle has been weighing over the sentiments of investors. The war could negatively impact the operations of global companies.
Recently, there was a release by the Institute for Supply Management, in which it was mentioned that the economic activity with regards to the manufacturing sector contracted in the month of August. As per the release, August PMI was 49.1%, which reflects a decrease of 2.1 percentage points from the reading of July at 51.2%. Talking about the performance on September 3, 2019, Dow Jones Industrial Average ended the session in red, as the index witnessed a fall of 285.26 or 1.08% on an intraday basis to end the session at 26,118.02. On the same day, a decline of 20.19 points or 0.69% was witnessed in S&P 500 Index and this made the session to close at 2906.27.
Growth of 0.5% Witnessed in Australian Economy
As per the release of ABS, Australian economy registered a growth of 0.5% in seasonally adjusted chain volume terms in the quarter ended June 2019 and 1.4% through the year. In the release, it was also stated that net exports made a contribution of 0.6 percentage points to the growth in the reported quarter, reflecting robust exports of mining commodities.
Australian Markets Closed in Red: S&P/ASX200 Falls 0.3%
As per the recent release by ABS, government spending was the primary contributor to the growth in the domestic final demand, which reflects ongoing delivery of services in disability, health as well as aged care. It needs to be noted that the performance of the broader Australian economy gets affected by the global economy’s performance. The trade battle has the potential to negatively impact the performance of Australian stock markets. Coming to the performance on September 4, 2019, S&P/ASX200 ended the session in red, as there was a decline of 20.4 points or 0.3% on an intraday basis to end the session at 6553. On the same day, All Ordinaries witnessed a decline of 17.4 points or 0.3% on an intraday basis to end the day’s session at 6656.1.
On September 4, 2019, Metcash Limited (ASX: MTS) and Oil Search Limited (ASX: OSH) posted an increase of 3.534% and 3.293%, respectively, on an intraday basis. On the other hand, CSR Limited (ASX: CSR) and Emeco Holdings Limited (ASX: EHL) fell in the intraday session by 6.549% and 5.344%, respectively.
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MTS Daily Technical Chart (Source: Thomson Reuters)
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