Materials sector ends three-day rally
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The news: The materials sector was the second worst performing by afternoon trade, ending a three-day rally that was buoyed by relief in the US-China trade war.
The numbers: The sector was down 1.07% by 3:36pm AEST as iron ore mining heavyweights fell — BHP dropped 0.96%, Fortescue was down 0.91%, and Rio Tinto slipped 0.58%.
Iron ore futures were down 0.72% to USD101.10 ($157.2) per tonne, snapping a three-day rally that was boosted by the temporary tariff reductions from the US and China on each other's respective goods. The last time iron ore traded above USD100 was in early April.
Meanwhile, gold miners made up five of the top 10 worst performers across the ASX 200. These included Bellevue Gold (-5.72%), Vault Minerals (-4.06%), Westgold Resources (-4.36%), West African Resources (-4.15%), and Newmont Corporation (-3.96%)
The spot price of gold was down 1.22% at USD3,125.83 ($4863.93) per ounce.
The context: An improving US economic outlook due to the de-escalation of the tariff war between the US and China has lowered the number of expected rate cuts by the Federal Reserve.
This has reduced the appeal of gold's safe-haven characteristics.
Hopes of a US interest rate cut are dampening following an improved economic outlook after the US and China lowered their tariffs on each other’s exports by 110% for 90 days, alongside a dampening of non-tariff trade restrictions.
This included a pause on China’s export restrictions on rare earths and other goods and technologies with military uses, announced on Thursday morning.
The sources: Bloomberg, Singapore exchange, Bloomberg
