Global markets end down Wednesday on renewed US/China trade tensions

Stock Markets

Australian shares are poised to edge lower today after stocks in Europe and the US finished down on Wednesday on a report claiming that the White House could blacklist more Chinese companies amid the release of the US Federal Reserve's May meeting minutes. Investor relief over the White House's postponement of restrictions against China's Huawei Technologies was short lived as The New York Times reported that the White House was prepared to impose restrictions on Chinese video surveillance firm Hikvision in an attempt to force concessions on trade. The news rattled global markets and raised US/China trade concerns as tensions between the US and China continue to escalate. The US Federal Reserve's May meeting minutes indicated that the Federal Open Market Committee opted not to change the central bank's benchmark interest rate at the meeting due to a lack of inflation pressure. US Treasury Secretary Steven Mnuchin stated that US President Donald Trump "will likely" meet with Chinese President Xi Jinping at the end of June. Mnuchin also indicated that the US Is at least a month away from enacting its proposed tariffs on $300 billion in Chinese imports.

Wall Street's major indexes closed in negative territory on Wednesday, as escalating tensions between the US and China weighed on stocks. The Dow Jones, S&P 500 and Nasdaq fell by 100.72 (-0.39%), 8.09 (-0.28%) and 34.882 (-0.45%) points respectively.

The benchmark S&P/ASX200 index closed 10.57 (+0.16%) points higher on Wednesday, setting another 11-year high and continuing the post-election bounce. The index was bolstered by strong gains in the energy and consumer discretionary sectors while the financial sector was flat. The energy and consumer discretionary sectors were up 0.67% and 0.76% respectively.

ASX 200 futures are currently down 11 points.

Today's data releases:  Japan Nikkei PMI manufacturing May; Euro zone Markit PMI services May; German IFO business climate May; UK retail sales April; US Makit manufacturing and services PMIs for May; US New home sales April; US Kansas City Fed manufacturing May

Commodities & Currencies

Oil futures sank on Wednesday as an unexpected build in US crude stockpiles compounded investor worries that a prolonged trade war between Washington and Beijing could dent crude demand. WTI and Brent crude are currently sitting at US$61.36 (-0.10%) and US$70.99 (-1.19%) per barrel respectively.

Iron ore prices are currently up 3.7% at US$105.78 a tonne.

The spot price of gold is currently down 0.82% at US$1273.83.

The AUD is currently down 0.01% at US68.81¢.

This article was written by Mithun Fernando – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via mithun.fernando@rivkin.com.au or by phoning +612 8302 3633.