The ASX will start slightly weaker this morning after Wall Street sold off for a third day in a row on growing fears about the impact of President Trump’s tariffs and ambitions to start a trade war with China and anyone else he doesn’t like.
The overnight ASX 200 futures market fell by less than 10 points in trading this morning, while the Dow was down 1%, the S&P 500 was off 0.6% and Nasdaq shed 0.2%.
All 11 sectors of the ASX 200 dropped on yesterday, as the index fell 0.6% to close at 5935.
The Dow and S&P 500 suffering their third straight daily decline as investors continued to fret over the change to a more protectionist trade policy by president Trump.
The Dow fell 245 points, or 1%, to 24,762; the S&P 500 lost 16 points, or 0.6%, to 2,750 and the Nasdaq Composite Index fell 14 points to 7,497, a decline of 0.2%.
The Dow’s losses were widespread, while nine of the 11 primary S&P 500 sectors ended down on the day.
Among the biggest decliners were materials and industrial stocks, both of which are seen as having a large exposure to trade issues such as the steel and aluminium tariffs to be imposed by President Trump.
Retail stocks took a hit from President Donald Trump’s announcement that his administration will seek to trim America’s trade deficit with China by $US100 billion via tariffs.
Boeing which dropped 2.5% after a report in the New York Times suggested the plane maker was a prime target for China to retaliate against in the event of a full-blown trade war.
Not helping retailers was yet another month of weak retail sales for the US.
US retail sales fell for a third straight month in February as households cut back on purchases of motor vehicles and other big-ticket items.
The Commerce Department said retail sales slipped 0.1% last month. January data was revised to show sales dipping 0.1% instead of falling 0.3% as previously reported.
Reuters said it was the first time since April 2012 that retail sales have declined for three straight months.
The sustained decline in retail sales is surprising as consumer confidence is at a more than 17-year high in the wake of the Trump tax cut package and the strong labour market.
Local investors will have some good news – Chinese iron ore prices rose sharply yesterday after 10 days of weakness.
The Metal Bulletin’s iron ore price rose by nearly $US2 a tonne to regain the $US70 a tonne level. The $US1.86 jump was a reaction to renewed demand from Chinese mills. The strong demand also halted the weakness in coking coal prices as well.
As well the Chinese winter season ends today and with it (traders hope) the curbs on steel production (as well as sintering of low grade ore and pellet making), leading to a rise in demand.
But the January and February steel production data, released the day before, showed a solid rise on a year ago, indicating the production curbs had little impact in winter.
The Metal Bulletin’s 62% Fe Iron Ore Index ended at $US71.64 a tonne, up 2.6%.
