The fall out from the latest escalation in the growing trade war between the US and China continued to pressure stock markets during yesterday’s trading. Tech stocks continue to bear the brunt of the pain but are naturally dragging down the other sectors, the Nasdaq closed the day down 1.46% with the S&P and Dow only down 0.67% and 0.33% respectively. The dollar dropped off it’s recent highs but the Dxy still remains relatively well bid up near the 98.00 level with some of the majors still looking vulnerable against the greenback in the current environment. Commodities had a fairly steady day with WTI around $63.3/b, Brent at $72/b and Gold consolidating once more under the 1280 level.
Australian markets experienced a strong trading day yesterday after the surprise victory for the Coalition over the weekend, however those rallies may be short lived as global growth concerns will probably come back to dominate local market euphoria very swiftly. The Aussie gapped higher on the open as a Labour victory had largely been priced into the market, but it still remains near long term lows and if the RBA’s Monetary Policy Meeting Minutes and Governor Phillip Lowe’s speech later in the day paint a more dovish picture, then expect the currency to drop back towards the 0.6850 level.
Looking ahead to the rest of the day’s trading sessions and those aforementioned Australian events will be the main releases of the Asian session, however expect global sentiment to continue to dominate other regional markets direction. On the London open expect focus to move to the UK as BOE Governor testifies before the Treasury Committee on the latest Inflation Report Hearings. There is little in the way of economic releases during the New York session today but we are hearing from more FOMC members as both Evans and Rosengren are due to speak with any dovish leaning expected to support stock markets in the short term.