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Trump's tweets sink Australian markets

Derek Rose
The futures market suggests the ASX will open higher

Two tweets by Donald Trump have tanked the local bourse - along with markets around the globe - as investors worried the US-China trade war might not be so close to resolution after all.

The benchmark S&P/ASX200 index closed down 52.1 points, or 0.72 per cent, to 6,283.7 points at 1615 AEST on Monday, while the broader All Ordinaries was down 57.3 points, or 0.89 per cent, to 6,369.9.

The markets tumbled after Trump warned China not to take too hard a line on trade talks, tweeting that the US tariffs on China had helped the US economy and noting that they are scheduled to increase on Friday.

"The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!"

"It was taken as a pretty clear signal to sell," said IG analyst Kyle Rodda in Sydney. "Anything tied to risk and growth has been belted. It's pretty much defined the whole day's trade."

The Wall Street Journal cited a source saying China was considering walking away from the trade talks with the US after the tweets.

Every sector was in the red aside from utilities, which were up slightly, 0.22 per cent.

Tech shares led losses, dropping 1.88 per cent collectively, with Wisetech Global down 5.13 per cent to $22 and Appen down 4.63 per cent to $24.31.

Westpac shares dropped 1.2 per cent to $27.11 after the bank's first-half profit slumped 22 per cent on customer remediation, restructuring costs and a weak property market.

The other big banks did better, wtih NAB up 0.97 per cent to $25.92 and ANZ up 0.51 per cent to $27.55. Commonwealth Bank gained four cents to $74.94.

Macquarie Group dropped 2.48 per cent to $125.62.

In the mining sector, BHP dropped 0.38 per cent to $36.80 and Fortescue Metals dropped 2.05 per cent to $7.15.

CIMIC Group shares plunged more than seven per cent after a scathing report by a Hong Kong firm, GMT Research, accused it of inflating profits by up to $1 billion.

CIMIC, Australia's largest construction company, said its annual reports "are fully audited and in compliance with the accounting standards".

CIMIC was the largest decliner among the ASX200, with its shares closing down $3.54 to $46.50, a two-month low.

Some gold miners gained from the general uncertainty, with Northern Star adding 0.49 per cent to $8.21 and Evolution Mining gaining 0.65 per cent to $3.09.

Pharma giant CSL fell 0.49 per cent to $198.90 while medical supplier ResMed slid 1.54 per cent to $16.01.

Retail Food Group was down 8.89 per cent after it acknowledged extending use-by dates on food products.

Bubs Australia jumped 11.32 per cent after the company announced a partnership with Fonterra Australia to produce a new line of organic infant formula.

The Aussie dollar is buying 69.91 US cents, from 69.95 US cents on Friday.

The Reserve Bank of Australia will announce on Tuesday whether it will cut interest rates, with traders forecasting there's about a 50-50 chance it will do so.

"It's going to be volatile," Mr Rodda warned, referring to currency fluctuations expected with the RBA decision.

ON THE ASX:

* The benchmark S&P/ASX200 index was down 52.1 points, or 0.82 per cent, to 6,283.7 points at 1630 AEDT on Monday.

* The All Ordinaries was down 57.3 points, or 0.89 per cent, to 6,369.9.

* At 1630 AEDT, the SPI200 futures index was up 47 points, or 0.76 per cent, to 6,210.

CURRENCY SNAPSHOT AT 1630 AEDT:

One Australian dollar buys:

* 69.91 US cents, from 69.76 US on Friday

* 77.43 Japanese yen, from 77.16

* 62.46 euro cents, from 62.41

* 53.29 British pence, from 53.04

* 105.52 NZ cents, from 105.52