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Index futures point to another day of falls after Donald Trump warned a trade deal with China may not happen for a year.
The SPI200 dived 54 points or 0.8 per cent to 6645 as Wall Street crumbled to a third straight loss.
The US president cranked up trade tensions overnight, telling reporters he had no deadline for concluding a trade deal and “in some ways, I think it’s better to wait until after the [November 2020] election.”
The S&P 500 fell 21 points or 0.66 per cent, led by declines in trade-sensitive stocks. The Dow shed 280 points or 1.01 per cent after earlier falling as much as 458 points or 1.7 per cent. The Nasdaq gave up 47 points or 0.55 per cent.
Markets were already unsettled after Trump announced on Tuesday his intention to reintroduce tariffs on steel and aluminium imports from Brazil and Argentina. His administration doubled down overnight by proposing tariffs on $US2.4 billion worth of French imports in retaliation for France’s “digital tax” on US tech giants. Trump accused the French of “taking advantage” of American companies.
During a night of negative trade developments, Commerce Secretary Wilbur Ross said the White House still planned to impose fresh tariffs on Chinese imports on December 15 unless talks made substantive progress.
Stock markets around the world have risen strongly over the last few months on the expectation that a ‘phase-one’ interim deal is close. Markets in the US and Australia traded at record levels last week. Wall Street neared a one-month low overnight after three losing sessions.
The ASX 200 suffered its heaviest decline in four months yesterday, tumbling 150 points or 2.2 per cent. The dollar is likely to be a headwind for exporters again today after rising more than a third of a cent overnight to 68.43 US cents.
The US retreat was led by companies that depend heavily on overseas sales. Caterpillar lost 2 per cent, Apple 1.8 per cent and an index of PC chipmakers 1.4 per cent.
Iron ore has largely resisted the cold winds blowing through stock markets, but BHP and Rio Tinto still fell in overseas trade. BHP’s US-listed stock lost 1.84 per cent and its UK-listed stock 2.58 per cent. Rio Tinto shed 0.99 per cent in the US and 1.31 per cent in the UK. The spot price for ore at Tianjin eased 75 cents or 0.8 per cent to $US88 a dry ton.
Oil markets also weathered the storm amid expectations OPEC will extend production caps at this week’s meeting to support prices. Brent crude settled 10 cents or 0.2 per cent lower at $US60.82 a barrel. The US benchmark, West Texas intermediate, rose 14 cents or 0.3 per cent to $US56.10.
Gold settled at its highest level in almost a month as traders hedged against a falling greenback and the possibility trade talks might collapse. Gold for February delivery climbed $15.20 or 1 per cent to $US1,484.40 an ounce.
Lead hit a five-month low as industrial metals markets shuddered at the prospect of further delays to a trade deal. Lead dropped 0.3 per cent on the London Metal Exchange, copper 1.2 per cent, aluminium 1.3 per cent, nickel 2.5 per cent and zinc 1.8 per cent. Tin added 1.6 per cent.
The day ahead brings quarterly GDP figures at 11.30am EST. Economic growth is expected to hold steady at 0.5 per cent. Services sector activity reports are due in Europe and the US. Wall Street also has November payrolls data scheduled tonight – an indicator for Friday’s official employment report.
