It’s looking like an ugly start to the week in Asian trade.
The global stock selloff intensified on Friday night, as the fallout from the threat of a US-China trade war continues to rattle markets.
The S&P500 extended Thursday’s losses with another 2.1% drop, capping a weekly fall of 6% — its worst one-week decline since 2016.
Along with recent trade developments, the US is also in a diplomatic spat with China over Taiwan while President Trump added to the fear and uncertainty on Friday night by threatening to veto a $US1.3 trillion spending bill which would have shut down the government.
So capital flowed into safe-haven assets as gold rose by more than 1% while the Japanese yen reached its highest level against the US dollar since November 2016. US 10-year bond yields held steady at around 2.81%.
And an increasing number of analysts are now reassessing their outlook for stocks, as protectionist rhetoric and geo-political tensions cast doubt over the continuation of synchronised global growth.
The washup is that ASX200 futures are pointing sharply lower, with the local index likely to fall below 5,800 on Monday morning to its lowest level since October last year.
Otherwise, it’s a quiet week of data ahead in Australia leading into the Easter break. Globally, key data will be headlined by PCE inflation figures in the US on Thursday night.
With no headline events scheduled this week, local data will be led by February updates for private sector credit growth (RBA, 11:30am AEDT) and job vacancy figures (ABS, 11:30am AEDT).
Both will be released on Thursday and are unlikely to be market-movers. Credit growth has been slowing in recent months, as sluggish growth in business lending fails to offset a slowdown in housing credit.
Jobs vacancy data has been growing strongly for a number of years, with the current level of vacancies pointing to a continuation of Australia’s record jobs streak in the coming months.
On the other side of the Easter holiday, key events will be led by the RBA’s monthly interest rate announcement on Tuesday April 3, followed by March retail sales data on Wednesday.
Looking abroad, the main focus this week will be on US personal income & expenditure data for February on Thursday night.
The release includes a monthly reading of PCE inflation — the preferred inflation measure of the US Fed. The consensus forecast is for annual core inflation growth of 1.5%.
Also on Thursday night there’s preliminary German inflation numbers for March. ANZ currency strategists have highlighted some downside risks for the euro, after the escalating global trade war weighed on global business confidence last week.
Elsewhere in a busy night of data on Thursday, the UK will get a final reading of Q4 GDP, following a third reading of Q4 GDP for the US economy on Wednesday night.
And there’ll be a wave of central bank speakers to start the week, led by New York Fed President William Dudley – a voting committee member of the Federal Reserve — who will speak on Monday night on the future of financial regulation.
Also on Monday night Loretta Mester — another voting member who predicted 3-4 rate 2018 rate hikes at the start of this year — will give a speech on monetary policy.
But this week it will all be about stocks. Hang on to your hats.
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