Good morning. Here’s what’s happening as Tuesday begins.
First, the scoreboard: (7:45am AEDT)
• Dow: 19809 -18 (-0.1%)
• S&P 500: 2267 -4 (-0.2%)
• SPI 200 Futures (March): 5,586 -52 (-0.9%)
• AUDUSD: 0.7573 +0.0013 (+0.2%)
1. Trump kills Australia’s trade deal: US president Donald Trump has signed an executive order regarding his intent to pull the US out of the Trans-Pacific Partnership trade deal. The TPP deal, which would lower tariffs for 12 countries around the Pacific Rim in, including Australia and Japan but excluding China, was negotiated under the Obama administration. However, it was not ratified by Congress.
2. Investors seek safety: US stocks fell with the dollar while Treasuries and gold gained amid Trump’s move to rework trade deals and investors await further details on his economic stimulus plans. The greenback fell against all major peers boosting the pound and the Mexican peso. Gold rose to the highest since November. AUstralian shares are poised to open weaker.
3. US speaker of the house and Trump differ on tax code: Paul Ryan and Trump had a seemingly small disagreement over a feature of the US tax code. And through that disagreement, they showed that they have two dramatically different ways of looking at the US economy: one is based on the reality, and the other is a fantasy.
4. 2017 the year for stock pickers: Leon Cooperman’s Omega Advisors says active equity managers will be able to take advantage of increased volatility. Omega isn’t the first to point out the potential for stock pickers this year, with many others expecting a strong year. That would be a change in fortune for many active managers, particularly hedge funds. On that, hedge fund manager Lee Ainslie says Trump’s policies could lead to more violent stock market movements.
5. Qualcomm shares slump as Apple sues: Shares in the chipmaker fell sharply following word that Apple is suing the company for $1 billion. Apple is accusing Qualcomm of withholding $1 billion in rebates under a deal they had struck to keep Qualcomm modems in Apple products, including the iPhone and iPad.
6. Data today: China releases January business sentiment indicator and Japan has flash Manufacturing Purchasing Managers Index. PMIs are also due from Euro area and US, which also has existing home sales.
7. Quiet in iron ore markets: Iron ore spot markets finished mixed on Monday with the benchmark price gaining modestly while both lower and higher grade ores fell. According to Metal Bulletin, the spot price for benchmark 62% fines rose by 0.9% to $US81.13 a tonne, bucking another steep fall in Chinese futures seen during the session.
8. Aussie dollar: The Australian dollar drifted higher against the US dollar in overnight trade, benefiting from a drop in US yields seen during the session. However the Aussie actually underperformed against the crosses.
9. Cyber crime and banks: Lloyds Bank was hit by a sustained cyber attack from overseas earlier this month that aimed to crash the lender’s website.
10. China and Bitcoin: China’s three largest bitcoin exchanges announced they will begin charging a flat fee of 0.2% per transaction. Releases from BTCC, Huobi and OkCoin state that the fees are being implemented to “further curb market manipulation and extreme volatility.” Elsewhere, Deloitte is launching a new “lab” in Dublin to pioneer new projects and solutions that use blockchain, the next-generation database technology first developed to underpin bitcoin.