Today's Trade: Aussie market hit by Trump tariff talk
- Trump says the US is considering imposing more tariffs on China
- The Aussie market is expected to start lower based on Trump's remarks
- In early trade ASX 200 was down 9.6 points, or 0.17% at 5,779.2
Overnight and early trading
In an early announcement after US markets closed, President Donald Trump he was considering slapping tariffs on another $100 billion in Chinese imports, which would triple the amount of Chinese goods facing import levies.
The president cited China’s “unfair retaliation” as a reason for the additional potential levies.
After the US threatened on Tuesday to levy tariffs on $50 billion of Chinese goods for alleged violations of US intellectual property laws, China quickly came up with its own $50 billion hit list of US exports to China, including aircraft and soybeans.
The US has said that it acted only a careful analysis of the facts but that China’s retaliation was without a similar basis.
China has also started an action in the World Trade Organization and the US threatened retaliation.
US Trade Representative Robert Lighthizer said that American industry would have the chance to comment on any additional tariff moves.
In his statement, US president Donald Trump said he was considering “$100 billion of additional tariffs” but trade officials have been quick to point out that the dollar amounts don’t refer to tariffs themselves but to the amount of exports on which tariffs are levied.
If tariffs are raised high enough, imports drop to zero, producing no additional tariff revenue.
USDJPY now testing 107 handle with eMini futures down to 2,620 at its lows.
Overnight the Dow Jones Industrial Average rose 240.92 points, or 1%, to 24,505.22, its first three-session winning stretch since February 26.
The S&P 500 climbed 18.15 points, or 0.7%, to 2662.84, while the Nasdaq Composite added 34.44 points, or 0.5%, to 7076.55.
Information sources: Bloomberg, TradingFloor.com, WSJ.com, CNBC
Local markets and commodities
- S&P/ASX 200 Index futures rose 0.3% to 5,7880
- Bank of New York Australia ADR Index is up 0.2% to 266.4, BHP Billiton ADRs are up 0.3% to A$28.95 equivalent, a 1.5% premium to last Sydney close, Rio Tinto ADRs are up 1.1% to A$67.06 equivalent, a 8.5% discount to last Sydney close.
- Gold rallies to 1,330 following Trump’s early comments after closing 1,326.55. Goldies were up 0.6%. Gold stocks: GOR, NCM, NST, AQG, EVN, KCN, RMS, RRL, SAR, SLR.
- Oil prices edged higher Thursday as fears that trade restrictions will crimp global economic growth took a back seat to declining US inventories. US crude futures rose 17 cents, or 0.27%, to $63.54/barrel on the New York Mercantile Exchange. Brent, the global benchmark, gained 31 cents, or 0.46% to $68.33 a barrel on ICE Futures Europe. On Thursday, oil prices got a boost from “the general brightening of sentiment on the markets as signs emerge that the trade dispute is easing between the US and China,” analysts at Commerzbank wrote in a note.
- The Trump administration’s tit-for-tat with China over potential tariffs on a host of goods appeared to shift to a new phase of intense negotiation over a new trade relationship. Prices had fallen to two-week lows Wednesday amid escalating trade tensions between the US and China, but crude markets began to pare losses following a bullish report from the U.S. Energy Information Administration late in the day. Oil stocks: WOR, WPL, STO, SEA, BPT, OSH, HZN, AWE, KAR, ORG, SXY.
- Iron ore closes flat at $63.57/tonne. Bulk commodities were largely unchanged, with the heavy losses earlier in the week contained by the risk on tone in global markets. Iron ore futures across. Asia were mixed, with Singapore futures largely unchanged while in China they remained under pressure. Iron ore stocks: FMG, BHP, GBG, GRR, MGX, RIO, BCI, SDL.
- Most base metals rose in London as investors assessed outlook for US-China trade tensions after both countries signal willingness to negotiate. LME copper rallied 1.1% to $6,799/ton, recouping Wednesday’s losses when China announced plans for retaliatory tariffs. Nickel added 1.3% to $13,315/ton, leading most metals higher whilst aluminum traded flat. Copper stocks: OZL, SFR; Nickel stocks: IGO, WSA; Aluminium stock: AWC.
- In other news: Ex-Dividend: Aberdeen Leaders Ltd., Cyclopharm Ltd; Macquarie Capital Is Said to Join Banks for Unibail-Rodamco Deal: AFR; David Jones Revisiting Possible Bid for Myer: Australian; Blue Sky Loses Half Its Value After Short Seller Glaucus Report
- ANZ Bank (ANZ AU): ANZ Bank Upgraded to Buy at Citi
- AP Eagers (APE AU): AP Eagers Upgraded to Equal-weight at Morgan Stanley; PT A$8.50
- Afterpay Touch (APT AU): Afterpay Touch Rated New Hold at Morgans Financial; PT A$6.34
- BHP (BHP AU): Top Miner BHP Quits World Coal Association Over Climate Clash; Potential BHP Shale Deal Raises Shell Buyback Concerns: RBC
- Santos (STO AU): Mercuria Seen Winning LNG Clout With Role in $10.3 Billion Bid; China’s ENN, Hony May Get Large Stake Under Santos Deal, CS Says
- Oil Search (OSH AU): 2nd LNG Tanker Since Earthquake Shutdown Nears PNG LNG Terminal
- Scentre Group (SCG AU): PRICED: Scentre Management EU500m 10Y MS +80
EURUSD is on the verge of breaking the uptrend (from April 17 low of 1.057) and also look to test the key support level 1.2250.
EURUSD failed to create a weekly close below this level 1.2250 since mid-January this year thus EURUSD is expected to maintain the recent resilience unless we see at least one weekly close below 1.2250.
The major focus tonight would be nonfarm payroll numbers at 2230, AEDT.
EURUSD quarterly chart
Source: Saxo Bank
Today's Trade information sources: AFR, SMH, CNBC, BBG, WSJ, The Australian, Reuters
-- Edited by Adam Courtenay
Today’s Trade is compiled by the Sydney trading desk at Saxo Capital Markets