To the scoreboard:
Dow: 23,533.20 -424.69 (-1.77%)
S&P 500: 2,588.26 -55.43 (-2.10%)
AUD/USD: 0.7699 +0.0006 (+0.08%)
ASX200 SPI futures (June contracts): 5,743 (-51)
1. It’s getting ugly out there: US stocks got sold off into the close on Friday night to cap a weekly decline of 6% — the worst one-week drop since 2016. With trade tensions raising doubts about the synchronised global growth outlook, the sellers are in control and Aussie stocks look set to get more roughed up than a cricket ball with sandpaper when markets open this morning.
2. Despite risk-off sentiment and a sharp fall in iron ore, continued weakness in the US dollar saw the Aussie rise back above US77 cents on Friday night before it lost ground into the close. The market jitters have driven demand for traditional safe-haven assets — particularly the Japanese yen which rose to its strongest level against the US dollar since November 2016.
3. Amid escalating US-China trade tensions, iron ore was in the firing line on Friday night as prices slumped by another 3.9% to their lowest level since November 21. The flight to safety saw gold catch a strong bid while geo-political concerns in the Middle East were the catalyst for a 2.2% jump in oil prices — with benchmark crude now back over $US70 a barrel.
4. The week ahead: With markets growing increasingly bearish there are no major data points in Australia this week heading into the Easter break. Key data globally will be led by US PCE inflation figures on Thursday night. The full diary is here.
5. Trade war wrap: China’s ambassador to the US didn’t rule out a scaling back of US treasury purchases by the US’s largest foreign creditor in response to last week’s tariff announcement. But US treasury secretary Steven Mnuchin said over the weekend he’s hopeful a truce can be reached with China before the $US60 billion round of import tariffs are enforced.
6. And although President Trump’s protectionist stance has rattled markets, the FT’s John Authers argues that last week’s selloff wasn’t just due to the trade war threat. For one, stocks look expensive — the tech-focused FANG stocks which have been driving market gains fell by 8% last week — while key economic data points also missed expectations.
Have a great week.