The Morning Jumpstart

OVERNIGHT MARKET SNAPSHOT (as at 7am AEST)

  • SPI200 (Mar) overnight futures down 48 pts to 6233
  • SP500 down 48.42 pts to 2884.05
  • NASDAQ down 159.53 pts to 7963.76
  • Dow Jones down 473.39 pts to 25,965.09
  • FTSE100 down 120.17 pts to 7260.47
  • DAX30 down 194.14 pts to 12,092.74
  • GOLD futures US Session (June) up $1.90 to $1285.70 an ounce
  • COPPER futures US Session (Comex July) down $0.0420 to $2.7880 a pound
  • OIL futures US Session (Nymex June) down $0.81 to $61.44 a barrel
  • CRB Index down 1.19 points to 179.49
  • AUDUSD trading at 0.7012
  • EURUSD trading at 1.1192
  • GBPUSD trading at 1.3073
  • USDJPY trading at 110.2300

The US was hit hard again overnight on the back of escalating trade tensions. Traders were happy to exit riskier assets and lock in some gains from the recent run to all time highs as the likelihood of the US raising tariffs later this week has increased. China is still sending negotiators to Washington to try and hammer out a deal and any news of moving forward, not backward, will be a positive for markets. The lack of ‘dip buying’ overnight is a sign that traders are not willing to stand in the way of an out of control selling frenzy and are happy to let things play out from the safety of the sidelines. The DOW closed down 1.79% while the broader SP500 was down 1.65% and the Nasdaq also closed down 1.96%. In Europe, Indexes also saw the sellers come out to play as markets ended down nearly 2%.

Traders turned to the safety of US bonds as prices headed higher and yields fell. The tone from Monday changed after US Trade Representative Robert Lighthizer vowed to continue talks but said that as of now “come Friday there will be tariffs in place” leaving traders skeptical that tariffs are not just a threat. Also of a concern is that talks could take much longer now to resolve which will hamper global growth.

The USD moved modestly higher as traders sought safety in the dollar and US bonds. The EUR managed to closed around the same levels as yesterday morning after pushing up 25 pips off lows around 1.1170 into the US close. The GBP was hit lower during the European session but managed to claw back some of the losses in the US trading session. The AUD initially rallied after the RBA left rates unchanged but then gave up most of the gains through European trade. The USDJPY continued to move lower on safe haven buying into the YEN which offset modest buying into the dollar.

Gold did not have as positive reaction to trade concerns and the drop in equity markets as some bulls would have hoped. The safe haven buying into the USD managed to cap any buying into Gold. Oil found selling pressure through European trade then managed to rally slightly into the US close but still finished weaker on global growth fears. Copper also was knocked down in European trade to find support around the 2.7750 level. Any fears that a deal will take longer to eventuate will impact Copper negatively.

Cryptocurrencies were mixed with Bitcoin having a positive night while other lagged. Bitcoin is currently trading just below the 6000 level at $5944.3 up 3.18%. Ethereum is at $173.50 down 0.76% while Ripple is at $0.30051 down 1.30%.

The ASX200 started the session strong to rally back to where it finished Friday prior to yesterdays selloff, then the RBA kept rates on hold and the markets sold off. The Index ended with minor gains up 12 points to 6295.7. The biggest movers were in the Resources and Mining Sectors with Financials ended lower. Declining stocks outnumbered rising ones by 578 to 550 and 407 ended unchanged.

The ASX200 is expected to open down around 50 points lower as the US took a nosedive overnight to drag the SPI200 lower.

ECONOMIC DATA OUT TODAY (AEST)

NZD Official Cash Rate, Monetary Policy and Rate Statements 12am

CNY Trade Balance Tentative

EUR German Industrial Production 4pm

GBP MPC Member Ramsden Speaks 6:15pm

EUR ECB Monetary Policy Meeting Accounts 9:30pm

USD Crude Oil Inventories 12:30am

SPI200 INTRADAY LEVELS TO WATCH