Good morning. To the scoreboard:
Dow: 24,538.06 -70.92 (-0.29%)
S&P 500: 2,691.25 +13.58 (+0.51%)
AUD/USD: 0.7763 +0.0008 (+0.10%)
ASX200 SPI futures (March contracts): 5,954 (+12)
1. The S&P500 edged higher on Friday night, driven by demand for defensive stocks as the fallout from the Trump administration’s threat of a trade war continues to rattle global markets. Stocks in Europe had a shocker (down 2%) but ASX futures traders have tentatively forecast a small gain on the local index today, although markets will likely wait for the US session tonight to get a better picture about the week ahead.
2. Bond markets jump around: Amid the increased level of uncertainty to end the week, bond yields got sold off on Friday with benchmark US 10-year yields rising six basis points to 2.87% — a full reversal of the previous day’s rally.
3. USD weakens: The US dollar index closed the week back under 90, losing ground to the yen and euro. Over the weekend, US commerce secretary Wilbur Ross acknowledged the retaliatory trade threats made by the European Union, but said the dollar-value impact would amount to “little more than a rounding error“. And the Aussie climbed off its lows ahead of a huge week of local data.
4. The week ahead: Key data in Australia this week kicks off with partial GDP indicators ahead of Wednesday’s headline release for Q4 GDP. There’s also retail sales and the RBA’s interest rate announcement on Tuesday. Internationally, markets will start the week eyeing the results of the Italian election which will start coming through today in Australia. The full calendar for a busy week ahead is here.
5. Trade wars hit home: The AFR reports that modelling by Deloitte Access Economics (DAE) suggests a global trade war would come at the cost of 20,000 Australian jobs and wipe around $5 billion from GDP. While those numbers are small in relative terms, some industries will be hit harder than others and DAE said the threat of a trade war could also stifle business investment.
6. Iron ore fell to a two-week low on Friday night, following steel prices lower amid higher steel inventories — although China is unlikely to be heavily affected by the proposed steel tariffs in the US. Oil closed higher ahead of the global CERAWeek oil conference in Houston this week, while gold found support amid the increased uncertainty in global markets.
Have a great week.