Closing Bell 19th September: Mining Stocks Decline as China’s Economic Woes Deepen, RBA Sounds Alarm on Growth Outlook

Economy at risk from sharp Chinese slowdown: RBA

The Reserve Bank of Australia (RBA) has raised concerns about the potential negative impacts of a sharp slowdown in the Chinese economy on Australia’s growth prospects. A significant decline in China’s economic performance could lead to a decrease in exports from Australia and a reduction in the number of international students. The RBA board’s decision to maintain interest rates at 4.1% on September 5 was influenced by these downside risks. The minutes from this meeting highlighted the RBA’s growing apprehension, noting the increased mentions of “China” or “Chinese” compared to previous months. A significant downturn in China’s economy could affect Australian services exports, resulting in fewer tourists and international students, and lead to lower export prices. However, the RBA also mentioned that any negative effects might be partially mitigated by a depreciation of the Australian dollar, which would stimulate exports and increase government revenue.

Strong oil prices lift energy shares

Energy stocks experienced a boost on Tuesday as oil prices reached a new 10-month high due to limited supply. Companies like Santos, Beach Energy, and Woodside saw their shares rise, while coal miners also benefited from a 0.4% increase in the Newcastle November contract. Whitehaven Coal and New Hope reported significant gains, with the latter announcing a $1 billion profit driven by robust coal demand and record prices. The global benchmark Brent touched $US95 a barrel, marking its highest point since the previous November. This surge in oil prices, which has been more than 30% since mid-June, is attributed to export curtailments by Saudi Arabia and Russia and an optimistic economic outlook in the US and China. However, the rising energy costs could intensify inflationary pressures, posing challenges for central banks worldwide.

Gold hits 2-week high as dollar eases ahead of Fed meet

Gold prices reached a two-week peak on Tuesday, with the US dollar retreating from its six-month highs achieved the previous week. Market attention is currently centered on the Federal Reserve’s two-day policy meeting. Spot gold remained stable at $US1932.79 per ounce, marking its highest level since September 5. Meanwhile, US gold futures experienced a slight increase to $US1954.30 per ounce. The Federal Open Markets Committee’s meeting is set to conclude on Wednesday, followed by a news conference, which is keenly awaited by market participants and analysts.