Growing US/China trade concerns offset US Interest rate optimism

Stock Markets

Australian shares are poised to open marginally higher today after US stocks closed mixed overnight amid a flurry of conflicting signals about the prospects for a trade deal between the US and China to be struck. Bloomberg reported Beijing is worried they haven't received assurances from the Trump administration that tariffs imposed on their exports would be lifted, with China pushing back against American demands for tougher intellectual property rules. In contrast the WSJ reported that negotiators were planning to hold fresh talks next week.

Wall Street's major indexes ended the session mixed as reports that China may be pushing back against American trade talk demands clouded US interest rate optimism. The Dow Jones and S&P 500 closed marginally lower, with the indexes losing 26.72 (-0.10%) points and 0.37 (-0.01%) respectively. Conversely, the NASDAQ 100 posted marginal gains, with the index gaining 9.47 (+0.12%) points.

The Federal Reserve began its two-day meeting on Tuesday. Fed Chairman Jerome Powell is expected to argue for no changes to the central bank's key interest rate following four hikes in 2018.

The benchmark S&P/ASX200 index closed marginally down 5.7 (-0.09%) points on Tuesday, as strong gains in the mining sector (+0.91%) failed to offset the poor performance in the health care (-1.64%) sector which was dragged lower by CSL. The mining sector was bolstered by a rally in Chinese iron ore futures on Monday after a Brazilian court ordered Vale SA to suspend two more dam operations.

ASX 200 futures are currently up 10 points. 

Today's data releases: BA assistant gov. Bullock speaks, WBC leading index February, NZ fourth quarter current account, UK CPI February; US Federal Reserve policy statement

Commodities and Currencies

Brent and WTI crude are currently sitting at US$67.68 (+0.21%) and US$59.03 (-0.10%) respectively.

Iron ore prices are currently down 1.2% at US$87.23 per tonne as Vale SA announced yesterday that a local court had allowed it to resume operations at its Brucutu mine.  

The spot price of gold is currently up 0.21% at US$1306.48 as investors sought out to increase exposure to the metal amid the confusion regarding US/China trade lingering in the market.

The AUD is currently down 0.06% at US71.00¢.

This article was written by Mithun Fernando – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3633.