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Australian shares fall lowest in two years amid trade war fears

Australian shares fell to the worst lows seen in two years on Monday, with growing concerns over slowing global growth and rising US and China trade tensions.

Aussie shares fall amid trade war fears

The S&P/ASX200 index fell as much as 1.9% in early trade on Monday, falling to one of its lowest levels since 2016.

Analysts say there are many factors at play, and data may have contributed to bringing down the shares, ignitubg China and US tensions.

This comes after China on Sunday demanded US to withdraw the arrest warrant of Huawei global CFO, Meng Wanzhou.

Meng was arrested last week in relation to violating sanctions after allegedly covering up her company’s links to affirm that they tried to sell equipment to Iran.

IG Market Analyst Kyle Rodda says markets are skittish that we are gradually approaching a period of slower growth.

US growth influences Australian shares

Mr Rodda also believes weak US and China data over the weekend may have also kept markets volatile.

“US growth has been in expansion for nearing a decade now -- that's very long time by historical standards. Throw in what's happened in US-Sino relations, the weekend's poor Chinese data, soft-NFPs on Friday, and stacks of risk this week, traders are selling out of risk.” Mr Rodda said.

The energy index fell 1.6%, while healthcare and technology stocks also feeling the heat due to high exposure to US markets.

Mr Rodda says there are also cyclical factors at play.

“More or less, with the Fed no longer supporting markets and the economy, there are concerns that the global economy won't be able to stand on its own two feet.” Mr Rodda said.

Metals and mining index and the gold index were the only sector indexes recording gains on Monday, with most major sectors trading in red.

Australia’s ‘big four’ banks were also feeling the hit, trading lower on Monday with Commonwealth Bank of Australia falling up to 2.9% and Australia and New Zealand Bank falling as much as 3%.

Westpac and NAB bank also fell as much as 3.2% and 2.4%.

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.