​The Trump administration has not yet formally deployed the long-awaited latest $200 billion in tariffs against China, but a new Wall Street Journal report indicates that Japan might be next on the agenda.
Article / 13 March 2018 at 23:05 GMT

Today's Trade: ASX opens lower on Wall St falls

Trading Desk / Saxo Capital Markets
  • The ASX200 opened lower following falls on Wall St
  • Oil slid amid concern that global demand might not absorb swelling US supplies
  • CIA Director Mike Pompeo has been nominated as the new Secretary of State 
  • He is replacing Rex Tillerson who was fired via Twitter by Donald Trump

By Saxo Capital Markets (Australia)

  • US equities fell for the second straight day as markets took in Tuesday’s economic and political news. The 10-year Treasury yield fell while the dollar held steady.
  • While an inflation report reinforced the sense that economic growth is picking up without runaway price increases, energy shares weighed on the S&P 500 Index as oil declined on concern that global demand might not absorb burgeoning US supplies. 
  • Retail sales and crude inventory figures due out Wednesday may offer more clues on the future of the economy.
  • Major indices opened higher, and the Dow Jones Industrial Average climbed as much as 197 points in morning trading after the latest round of inflation data showed consumer prices increased more modestly in February than in the previous month.
  • But shares turned broadly lower by midday, with eight of the 11 sectors in the S&P 500 ending the session in the red.
  • The Dow fell 171.58 points, or 0.7%, to 25,007.03, while the S&P 500 declined 17.71 points, or 0.6%, to 2765.31. The tech-heavy Nasdaq Composite dropped 77.31 points, or 1%, to 7511.01, breaking a seven-session winning streak.
  • Tech stocks were the weakest performers in the S&P 500, falling 1.2%, after a big rally in 2018. Chip maker Qualcomm fell $3.11, or 5%, to $59.70, after President Donald Trump late Monday blocked Broadcom’s $117 billion hostile takeover bid on national security grounds.
  • Meanwhile, financial stocks in the S&P 500, another top-performing sector this year, fell 1.1% alongside a decline in bond yields. Lower yields normally bode poorly for banks’ net interest margins, a key measure of lending profitability.
  • The yield on the US 10-year Treasury note settled Tuesday at 2.848%, down from 2.870% on Monday. Yields move inversely to prices.
  • Before the opening bell, the Labor Department said the consumer price index, which measures what Americans pay for everything from shampoo to hotel stays, rose 0.2% in February after climbing a seasonally adjusted 0.5% in January.
  • President Trump also said Tuesday he would nominate Central Intelligence Agency Director Mike Pompeo as Secretary of State to replace Rex Tillerson.
  • A lack of inflationary jitters during 2017 allowed US stock indices to leap to multiple records early in 2018, while investors kept long-term bond yields subdued.
  • Since the start of February, however, rising inflation in both the US and Europe has prompted investors to second-guess central-bank guidance, fuelling speculation about tighter monetary policy.
  • The inflation data were released against a fraught trading backdrop, with the Trump administration’s announcement of tariffs on steel and aluminum imports having provoked rebukes from China and the European Union in recent days.
  • Elsewhere, the Stoxx Europe 600 slipped 1%

Source: Bloomberg,,, CNBC

 President Trump’s sacking by Twitter of Secretary of State Rex Tillerson – already
being called 'Rexit' – is grabbing the headlines. Photo: Shutterstock

Local markets and commodities

  • S&P/ASX 200 Index futures fell 0.6% to 5,925. Futures relative to fair value suggest an early decline of 0.6%
  • Bank of New York Australia ADR Index fell 1.2% to 274, BHP Billiton ADRs are down 1.5% to A$28.51 equivalent, a 0.6% discount to last Sydney close, Rio Tinto ADRs are down 0.3% to A$66.24 equivalent, a 10.5% discount to last Sydney close
  • After coming under pressure early in the session, gold prices rebounded sharply on the news that US President Trump had fired his Secretary of State. This saw the USD weaken and safe-haven buying emerge as the market tried to digest the implications of this latest shakeup at the White House. 
  • Investors also found comfort in a relatively steady increase in inflation in the US. The 0.2% increase in consumer price index suggests it won’t be enough to spur more rate hikes by the Federal Reserve than already expected. 
  • Spot gold was up 0.27% at $1,326.18/ounce, while US gold futures for April delivery gained 0.44% to $1,326.60. Gold stocks in Toronto added 1.3% overnight. Gold stocks: GOR, NCM, NST, AQG, EVN, KCN, RMS, RRL, SAR, SLR
  • Oil slid in New York amid concern that global demand might not absorb swelling US supplies. Futures fell 1.1%, and April futures slipped below May contracts. The US government expects major shale regions to boost output by 131,000 barrels/day in April, spurring fears that surging supplies will undermine Opec's efforts to clear a glut. 
  • Analysts forecast a third consecutive increase in US inventories. The American Petroleum Institute will release its inventory report later Tuesday. Oil has struggled to recover losses from last month’s broader market slump after topping $66/barrel in January. 
  • While a brighter economic outlook has underpinned demand expectations, expanding American production remains a challenge to Opec and its allies, which are trying to prop up prices via output curbs. "The market is having a wobble on the back of the potential impact on future supply from Iran and also for the ramifications for the Middle East as a whole," Ole Hansen, senior manager at Saxo Bank, said. 
  • West Texas Intermediate for April delivery lost 65 cents to settle at $60.71/barrel on the New York Mercantile Exchange. The spread between the first two contracts settled at minus 4 cents, the first time it closed at a discount since January 22. 
  • Brent for May settlement sank 31 cents to settle $64.64/barrel on the London-based ICE Futures Europe exchange. The global benchmark widened to a $3.89 premium to May WTI. Oil stocks: WOR, WPL, STO, SEA, BPT, OSH, HZN, AWE, KAR, ORG, SXY
  • Sentiment in the iron ore market remained gloomy, with investors still weighing up the implications of the recent US tariffs on steel and aluminium imports. However, prices did recover somewhat on news that the authorities in Tangshan are extending production cuts beyond winter. 
  • A two-tier system of restrictions will be in place until November. Mills closest to the city will have to halt 15% of capacity, while the remainder will need to stop around 10%. The limits are being driven by a need to improve air quality, according the authorities. These restrictions on steel capacity continue to support steel prices, which helps some raw materials such as iron ore. Spot iron ore was flat closing at $71.23. Iron ore stocks: FMG, BHP, GBG, GRR, MGX, RIO, BCI, SDL
  • Industrials were stronger, with the weaker USD helping investor appetites in the base metals sector. Positive fundamentals also helped support the sector. Lead rose sharply, after data showed a spike in cancelled warrants (orders to withdraw inventory from exchange warehouses). This was the same in nickel, while rising premiums and strong consumer orders added to the positivity, although its price was steady. 
  • In the zinc market, prices were unchanged despite further falls, and inventories at LME warehouses pushed prices higher. Among base metals, front-month copper for March delivery edged up 0.5% to $3.1190/pound. Prices have fallen 4.9% this year on worries that demand from China, the world’s largest consumer, might slow, but some analysts expect steady economic data and supply disruptions to boost the industrial metal as the year goes on. Copper stocks: OZL, SFR; Nickel stocks: IGO, WSA; Aluminium stock: AWC
  • New Zealand February Home Sales Rise 1.2% From Year Ago: REINZ
  • Shell Risks Losing Gas Race as Rival Targets Shared Reservoir
  • Ex-dividend: Austal, CSL, Costa Group, Michael Hill Intl, RCR Tomlinson, Sky Network TV, Tassal Group
  • Boral (BLD AU): Sues Saint-Gobain Over Patent for Stone Veneer Wall Panels
  • Brambles (BXB AU): Hosts Investor Day
  • Charter Hall (CHC AU): Considers Taking Full Control of Sydney Office Building in A$300m Deal: AFR
  • Inghams (ING AU): TPG Seeks ~A$200m Selling Shares: Terms
  • New Hope (NHC AU): Non-Deal Roadshow Scheduled By Morgans for Mar. 21
  • Platinum Asset Mgmt (PTM AU): Scheduled to Host Annual Adviser Lunch in Perth
  • Prairie Mining (PDZ AU): JSW CEO Says Looking at Potential Projects Held By Prairie
  • Rio Tinto (RIO AU): Mongolian Mine Asked for Information by Corruption Unit
  • Westpac (WBC AU): Issues A$1.69b of Capital Notes 5

Broker upgrades and downgrades

  • A2 Milk (A2M AU): Rated New Add at Morgans Financial
  • Integral Diagnostics (IDXAU): Upgraded to Buy at Ord Minnett; PT A$2.39


The rally seen in AUDJPY, which ensued following the retest of the 2017 base, seems to have come to an end as the overnight session saw a bearish reversal off its historically noisy levels. The overnight high also coincides with a 38.2% retracement between the 2018 high to low thus a short trade makes sense with a stop above the session high at 84.50. The downside target is the 83 handle followed by 82 where we would neutralise all bearish trades.

AUDJPY monthly
Source: SaxoTrader. Create your own charts with SaxoTrader; click here to learn more 
Today's data sources: AFR, SMH, CNBC, BBG, WSJ, The Australian, Reuters

– Edited by Gayle Bryant

Today's Trade is compiled by the Sydney trading desk at Saxo Capital Markets. Follow the team on Twitter at: Saxo Capital Markets (Australia). 

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