ASX shares expected for pull back as futures down 110 points

Stock Markets

US:Stocks fell as the broader indexes experienced their worst day of the year on renewed worries of the US-China trade war and the potential damage to the global economy. This follows the Chinese Yuan dropping to its lowest levels in over a decade as president Trump is quoted as referencing this to be "currency manipulation". China has also halted purchases of US farm products following a fresh threat of over $300 billion in tariffs on Chinese goods. The S&P500 dropped 87.31 points or roughly 3 per cent for its worst loss since December 2018.  This sell-off coincides with short term bond yields rising above 10-year yields, a potential warning sign for a looming recession.  With escalating trade tensions, the Fed might be forced to move its hand with further interest rate cuts. As a silver lining, companies are in the latest round of quarterly earnings where the results have not been as bad as some may have anticipated.

ASX futures are down over 100 points. Selling in growth stocks was heavy as investors looked to exit riskier stocks. This follows the trend of tech stocks selling off following significant gains since the start of the year.Appen shares fell 10.6 per cent, Wisetech Global slid 8.1 and Afterpay down 7.8. 

Commodities: 

Gold surged 2% to its highest levels in over 6 years, copper prices reached lowest levels in 2 years, and nickel prices climbed on concerns over supplies from Indonesia. The spot price of goldis currently up 2.26% at US$1,473.09 per ounce. 
The AUD
 is currently down 0.38% at US$0.6763.

This article was written by Luke Bell – Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3633.