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Stocks are set to open sharply lower after the prospect of fresh rate cuts was overshadowed by Wall Street’s worst session in a month as Democrats moved to impeach President Donald Trump.

ASX SPI200 index futures dived 72 points or 1.1 per cent to 6663 as US stocks fell for a third session. 

Global markets were buffeted by heavy winds overnight. Democratic House Speaker Nancy Pelosi this morning announced a formal impeachment inquiry into the president. Elsewhere, Trump launched a scathing attack on Chinese trade practices, and Chinese delegates lashed out at Australia’s support for the US. 

The S&P 500 slid 25 points or 0.84 per cent to its largest loss since last month. The Nasdaq fared worse, shedding 119 points or 1.46 per cent. The blue-chip companies of the Dow weathered the storm best, easing 142 points or 0.53 per cent. 

Following the close of regular trade, House Speaker Pelosi announced an inquiry into a phone call Trump made where he allegedly pressured Ukraine’s President to investigate the family of former Vice President and presidential candidate Joe Biden. Share-market losses deepened after Biden said he supported impeachment

US stocks were already under pressure after Trump attacked China in a speech to the United Nations, dimming the prospects for a trade deal. Soft consumer confidence and housing data released last night appeared to underline the negative impact of the trade war.

A market-friendly speech by Reserve Bank Governor Philip Lowe last night was lost in the blizzard of negative headlines. Lowe went as far as he could to signal a 25 basis pointrate cut next month, telling business leaders in Armidale that cuts earlier this year were needed to lift inflation and drive down unemployment. The unemployment rate has since ticked higher. 

Australia’s relations with China came under the spotlight after delegates visiting the Chinese embassy in Canberra attacked the government for backing US criticism of China’s “developing nation” status. One delegate accused Australia of playing a “pioneering role in an anti-China campaign”, according to Fairfax. 

The nation’s largest miners look set to drag on the index today after the price of iron ore fell below $US90 a ton. BHP’s US-listed stock gave up 2.75 per cent and its UK-listed stock 2.86 per cent. Rio Tinto lost 2.96 per cent in the US and 2.52 per cent in the UK. Spot ore landed in China declined $4.05 or 4.3 per cent yesterday to $US89.60. 

A risk-off session on commodity markets saw oil and copper fall and gold rise. November Brent crude settled $1.67 or 2.6 per cent lower at $US63.10 a barrel following a Reuters report that Saudi Arabia could reach full production at its damaged facilities as soon as next week. The continuous copper contract in the US eased a cent or 0.3 per cent to $US2.60.

Gold rose to its highest point in three weeks as Trump’s UN speech pushed traders towards havens. Gold for December delivery settled $8.70 or 0.6 per cent ahead at $US1,540.20 an ounce. 

The dollar would normally fall when the outlook is for lower rates, but Australian domestic affairs were overshadowed by events overseas. The Aussie unit rose a third of a cent to 67.89 US cents. 

Political issues look set to dominate the session ahead. The domestic economic calendar is light today. All eyes will be on Washington for the next 24 hours. 

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