Global Stock indices had a mixed day yesterday as a combination of poor data and some confusion over progress on trade negotiations between Chian and the US hit market sentiment. The US markets all finished the session in the negative after Durable goods data came out much worse than expected and worries that US tariffs on Chinese imports will be implemented on March 1 rose. Treasuries fell with the US 10 year up to around 2.69% and the dollar gained ground against all the majors with the exception of the yen, the Dxy now sitting at 96.60. On the Commodities front, Gold took a big hit, dropping from 1.5% on the day from 1340 to around 1323 and Oil retreated from recent highs with WTI now trading just south of $57/b and Brent back under $67/b.
The Aussie took another hit late in the Asian session yesterday as news filtered through that the Chinese port of Dalian has banned imports of Australian Coal, this coming on the back of reports earlier in the week that customs delays in China had more than doubled for Australian Coal. We’d seen strong employment data earlier in the day but this news, plus Westpac predicting two rate cuts this year has superseded the impact of the data print. Political tensions have been escalating between the two countries and some investors are seeing this as a retaliatory measure from China after Canberra banned high profile Chinese telecommunications giant Huawei from Australian 5G networks. The Aussie is back trading under 0.7100 this morning and any further negative news on this front or indeed with regard to global growth concerns could see ‘the battler’ tumble significantly through the crucial 70 cent level.
Looking ahead to today’s trading sessions and it’s a quiet day in terms of data releases in the Asian session. The German IFO number will be a big focus in the London session and focus will move to Canada on the US open with the release of the latest Retail Sales data. The main focus of the trading day will come later in the US session as a whole raft of central bankers are set to speak, notable ECB President Mario Draghi and several members of the FOMC including Vice Chair Richard Clarida.