To the scoreboard:
- Dow: 26,062.12 -92.55 (-0.35%)
- S&P500: 2,888.80 -16.18 (-0.56%)
- AUD/USD: 0.7180 +0.0037 (+0.52%)
- ASX SPI futures (September contracts): 6,179 (-4)
1. US stocks fell overnight as markets braced for major escalations in the US-China trade war. The Nasdaq Composite dropped nearly 1.5%, with companies like Apple earlier warning tariffs could force them to raise prices.
2. The Trump administration is expected to impose tariffs on an additional $US200 billion worth of Chinese products this morning. It will mark a significant escalation in the trade war and China has said it will hit back.
3. The US dollar lost ground across the board, but the AUD fell back sharply from its overnight highs following the latest trade announcement. “If China decides to cancel new trade talks in response to US trade tariffs action, the USD would likely recover most of its recent losses,” CBA’s Elias Haddad said.
4. Benchmark US 10-year bond yields continue to hover around 3%, after pushing higher at the end of last week. Capital Economics expects US 10-years to climb to 3.25% as the Fed continues on its rate hike cycle.
5. Gold was higher amid weakness in the USD, while copper recovered some ground after a 2.5% drop on Friday. Oil prices were flat after brent crude briefly topped $US 80 a barrel last week, while bitcoin fell by 4% to around $US6,250 overnight.
6. And elsewhere in trade, NAFTA negotiations between the US and Canada look likely to stall. Prime Minister Justin Trudeau defended regulations on the country’s dairy market, an issue the US has signalled it will not be quick to budge on. Canada imposes high import duties in its dairy market to support prices.
UPDATE: President Trump has announced tariffs on another $US200 billion of Chinese goods. The Australian dollar is sliding, with markets now watching for China’s yuan-fixing at 11:15am AEST.
Here’s a look at the key events on economic calendar:
- RBA minutes from the September board meeting (11:30am AEST).
- European Central Bank President Draghi speaks in Paris.
- Housing starts and existing home sales numbers are out in the US.
- Interest rate announcement in Hungary.
- Argentina Q2 GDP.
Have a great day.
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