US markets slide on fading US/China trade optimism

Stock Markets

Australian shares are poised to open lower today after US stocks closed sharply lower on Tuesday as investors returned from the long holiday weekend to comments from US President Donald Trump that the US is "not ready to make a deal" with China. Trump also added that tariffs on Chinese imports could go up "substantially" in the near future. The comments raised investor concerns about the ongoing US/China trade war as tensions between the two powerhouse economies continue to escalate. A Bloomberg Economics study found that the tariffs so far could reduce China's quarterly gross domestic product by 0.5%, while the U.S. and the rest of the world would see a 0.2% reduction in 2021. In addition to the US/China trade worries, the yield curve inversion steepened as the yield on the benchmark 10-year Treasury note fell to around 2.26% (19-month low). The Conference Board reported the US consumer confidence improved in May, rising to 134.1 from April's figure of 129.1 and beating economists' expectations of the index rising to 130.  

Wall Street's major indexes closed lower on Tuesday, after comments from Trump renewed US/China trade concerns and weighed on the indexes. The Dow Jones, S&P 500 and Nasdaq fell by 237.92 (-0.93%), 23.67 (-0.84%) and 29.658 (-0.39%) points respectively.

The benchmark S&P/ASX200 index closed 32.942 (+0.51%) points higher on Monday. The index benefited from strong gains in BHP and RIO on the back of a rising iron ore price.

ASX 200 futures are currently down 43 points.

Today's data releases:  New Zealand ANZ business confidence May; RBNZ Financial Stability Report; US Richmond Fed manufacturing May

Commodities & Currencies

WTI crude fell 0.36% to US$58.93 per barrel while Brent crude remained flat at US$70.11 per barrel.

Iron ore prices are currently down 2.3% at US$106.11 a tonne.

The spot price of gold is currently down 0.71% at US$1279.77 an ounce.

The AUD is currently down 0.04% at US69.21¢.

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.