The share market is set to open deep in the red after soft manufacturing data and fresh trade threats from the White House rattled global markets.
ASX SPI200 index futures tumbled 90 points or 1.3 per cent to 6777 as US stocks took their biggest hit in almost two months and European benchmarks fell more than 2 per cent.
Wall Street lost its grip on record levels after a report sparked fears of a manufacturing recession and President Donald Trump announced tariffs on imported metals from Brazil and Argentina. The S&P 500 fell for a second night, losing 27 points or 0.86 per cent during its sharpest decline since October 8. The Dow shed 268 points or 0.96 per cent and the Nasdaq 97 points or 1.12 per cent.
The ASX 200 looks primed for a swift readjustment after yesterday rising 16 points or 0.2 per cent, finishing just shy of last week's all-time closing high on reports Chinese manufacturing regained traction last month after a long slowdown. A sharp jump in the dollar overnight will present a headwind for exporters.
The Reserve Bank meets today, but is widely expected to leave its benchmark rate on hold at 0.75 per cent. The odds on a cut are just 11 per cent, according to the ASX's RBA Rate Indicator.
US stocks opened higher on the Chinese factory rebound but quickly lost ground as domestic concerns seized the spotlight. US manufacturing contracted for a fourth month and construction spending declined, resurrecting fears the economy is succumbing to the effects of a drawn-out trade war with China. The Institute for Supply Management's Manufacturing PMI dropped to 48.1 last month, below the 49.4 anticipated by economists. The contrast between Chinese and US reports sharpened concerns that China is "winning" the trade war, strengthening its hand in negotiations.
Overnight, Trump opened a new front in his global trade war. The president tweeted he would introduce tariffs on Brazilian and Argentinean steel and aluminium in retaliation for those countries devaluing their currencies, "which is not good for our farmers".
Reports of reduced foot traffic at stores during Black Friday sales weighed on retail stocks. The retail sector slid more than 1 per cent.
The latest tariffs appeared to spook European markets, where the European Union is also negotiating a difficult trade relationship with the US. Major indices in Germany, France and Italy all skidded more than 2 per cent. The pan-European Stoxx 600 lost 1.58 per cent.
Australia's biggest miners rode out the storm, thanks to an uptick in iron ore following yesterday's upbeat Chinese data. BHP's US-listed stock rose 0.43 per cent and its UK-listed stock 0.51 per cent. Rio Tinto gained 1.06 per cent in the US and 0.68 per cent in the UK. The spot iron ore price at Tianjin improved $1.50 or 1.7 per cent to $US88.75 a dry ton.
Oil settled higher amid anticipation that OPEC and its partners will extend production cuts at this week's meeting. Brent crude rose 43 cents or 0.7 per cent to $US60.92 a barrel.
Copper inched higher, but other metals traded near multi-month lows. Benchmark copper on the London Metal Exchange rose 0.3 per cent to $US5,883 a tonne. Zinc lost 1.3 per cent after trading close to its weakest point in three months. Nickel hit its lowest level since July before bouncing 0.4 per cent. Lead fell 1.6 per cent back to July lows. Tin eased less than 0.1 per cent. Aluminium rose 1.1 per cent.
Gold pared a heavier initial fall as the greenback declined at the prospect the Federal Reserve may have to cut rates to support the US economy. Gold for February delivery settled $3.50 or 0.2 per cent weaker at $US1,469.20 an ounce after trading below $US1,460.
The Australian dollar caught a sharp lift from the decline in the US unit, jumping nine-tenths of a cent to 68.25 US cents.
National current account figures are due at 11.30 am EST. The Reserve Bank meets this morning and is due to issue a statement at 2.30 pm that will be closely parsed for clues to the next move in rates. The economic calendar is light tonight in the US, which may be a blessing after the reaction to overnight reports.