• The S&P/ASX200 benchmark index was lower by 56.7 points, or 0.93 %.
• Risk-off sentiment seeing the index fall to a 78.6% Fib and support.

Shares have dropped in early trading on the Australian market in response to tensions brewing between the US and China, coronavirus spreading and a gloomy economic outlook for the US economy.

The S&P/ASX200 benchmark index was lower by 56.7 points, or 0.93%t, at 6038.0 at the time of writing and offered after the first 15 minutes of trade on Friday.

First of all, the sectors worst hit at the start of play was the property suffering a drop of 1.59%.

Consumer discretionaries lost 1.47% and information technology dropped 1.44%.

The heavyweight financial sector was also pressured, lower by 0.93%in the open.

Utilities have been bucking the trend though, up 0.08% at the start of play.

US data sours the outlook for US growth

Meanwhile, US data soured the already fragile mood on Wall Street overnight. Jobless claims reached 1.416 million last week.

The “miss” wasn’t large with weekly claims for the week to 18 July at 1,416,000 against expectations of a fall to 1,300,000, analysts at ANZ Bank argued.

That said, it was enough to spook the market, and it comes at a time when Congress is negotiating a new package to help tens of thousands of American workers who are set to lose benefits at the end of this month.

Continuing claims for the prior week fell more than expected, but the Kansas City Fed’s Manufacturing Index didn’t recover as well as had been expected.

Congress kept working to pass more economic stimulus. Senate Republicans said they could present their version of the bill to Democrats as early as this week.

Meanwhile, total US coronavirus cases have topped 4 million, and there were nearly 2600 new cases every hour on average, according to a Reuters tally.

• Hospitals in Florida had no available beds in intensive care units, US cases accelerate

Wall Street had the Dow Jones Industrial Average falling 353.51 points, or 1.31 per cent, to 26,652.33, the S&P 500 lost 40.36 points, or 1.23 per cent, to 3,235.66 and the Nasdaq Composite dropped 244.71 points, or 2.29 per cent, to 10,461.42.

After the bell, Secretary of State Pompeo delivered a speech on relations with China, saying that the “old paradigm of blind engagement with China has failed.”

This, coupled with the already tense situation between the US and China pertaining to the possible countermeasures against the US order to close the Chinese consulate in Houston weighed don sentiment for the open in Asian bourses today. 

• Expelling US consular spies an option for China – GT analysts

ASX 200 index levels

The index is pulling back from the July highs and testing trendline support in the 6030s. 

The price has retraced to a 78.6% retracement and a prior resistance level at this juncture which guard a break to 5995 structure.