The sell-off in global markets in the wake of Donald Trump’s threat to impose new tariffs on $US200 billion of Chinese exports to the US eased overnight and the ASX is looking at a solid start to the session later this morning.
Media reports were conflicted on whether China would still send a group to Washington to negotiate with the Trump administration but by the end of the session, it seems they will, which helped turn around market sentiment.
After the Dow plunged almost 472 points in early trading in the wake of a big sell-off in Chinese markets, in particular, the selling pressure eased and the Dow ended off 66 points.
The S&P 500 was down 0.45% at the close while the Nasdaq ended off 0.5%. Both had also seen bigger losses during the session.
Overnight futures trading on the ASX 200 also swung from a loss (after the 52 points or 0.8%) in early trading, to be up more than 40 points at the close, pointing to a much stronger start to trading here today.
Local investors in Australia will be just as interested, if not more in what the Reserve Bank decides to do with interest rates later today.
Oil futures prices also fell sharply, but then rebounded. US crude futures ended 31 cents, or 0.5%, to settle at $US62.25 a barrel, giving up earlier losses that had pushed prices to as low as $US60.04 a barrel.
Comex gold prices rose in early trading, then sold off as the US session went on to end up 30 US cents an ounce at $US1,281, Earlier the Comex futures price had settled at $US1,283 an ounce, up $US2.50.
US bond yields fell as investors sought safety – the yield on the 10 year T note dropped three points to just over 2.49%, a month low.
The Aussie dollar was trading at 70 US cents in early Asian dealings o Tuesday after hitting a low overnight of 69.63 US cents. The Aussie recovered from a sharp early fall to trading as high as 70.03 US cents.
Investors focused for much of the session on the tariff threats and whether China will send a delegation to try and settle to the dispute in talks in Washington this week.
There were conflicting reports that China would not send negotiators, that it would, but they would be low ranking and therefore not capable to making big decisions.
According to Hong Kong’s South China Morning Post China’s Foreign Ministry spokesman, Geng Shuang said that China is still preparing to send a delegation to Washington for trade talks despite Trump’s threat to raise tariffs.
