3. Growth outlook cast into doubt: Fresh doubts about the US economic outlook saw broader growth-sensitive assets struggle, and safe havens catch a strong bid. The US dollar reclaimed the losses it sustained in early Asian and European trade as demand for US Treasuries saw the yield on the US 10-year note drop to 62 basis points. Oil prices dropped by 2.3 per cent, and gold edged back above the $US1800-mark. The Australian dollar also dipped 0.1 per cent, having challenged the 70 US cent handle during European trading hours.
4. US-China tensions add to volatility: COVID-19 was not the only factor undermining market sentiment overnight. Heightening US-China tensions also rocked the market after the Trump administration declared Chinas claims to parts of the South China sea unlawful. That move from the White House came close on the heels of announced sanctions from China on several prominent US politicians, including Marco Rubio and Ted Cruz, for their involvement in sanctions against Chinese officials involved in human rights abuses against Uighur minorities in Xinjiang.
5. European stocks, euro rally: The tumble in US stocks defied what was a very positive lead handed to it by European markets. It proved a very bullish day for European stocks and the euro, with Germany’s DAX rallying 1.32 per cent and London’s FTSE100 up 1.33 per cent, and the euro adding 0.5 per cent against the US dollar to finish atop the G10 currency map on Monday. European sovereign bond yields also spiked. The moves came seemingly as market participants prepare for the EU leaders summit at the end of the week, at which European leaders are expected to take another step forward towards a bloc-wide fiscal stimulus package.
6. ASX200 set to drop at the open: Wall Streets poor lead is setting the ASX200 up for losses at the open this morning. SPI Futures are indicating a 0.75 per cent drop for the index. The move will come off the back of what was a relatively positive days trade on Monday for Australian stocks, which saw the ASX200 add just shy of 1 per cent. It wasnt a one-way traffic day for local equities, however. Once again, concerns of new COVID-19 outbreaks, this time in New South Wales, saw the ASX200 hit some intraday turbulence, and finish off of the sessions highs.
7. US bank earnings top agenda: The US reporting season is starting now, with the financial sector set to dominate the agenda for the rest of the week. Several major US financial institutions report before the US market opens tonight, including Citigroup and JP Morgan. Wall Streets financial stocks are tipped to be something of a bellwether for the US economy this earnings season. And analysts have been telling investors to brace for a torrid second-quarter. Estimates are pointing to a 50 per cent profit decline for US financials, with main street banks looking at a 70 per cent slump.
8. Market watch:
ASX futures down 45 points or 0.8 per cent at 5892 near 7am AEST.
- AUD +0.2% to 69.65 US cents
- On Wall St: Dow flat S&P 500 -0.9% Nasdaq -2.1%
- In New York: BHP -0.6% Rio -0.3% Atlassian -6.5%
- In Europe: Stoxx 50 +1.6% FTSE +1.3% CAC +1.7% DAX +1.3%
- Spot gold +0.5% to $US1808.04 an ounce at 2.48pm New York time
- Brent crude -1.5% to $US42.61 a barrel
- US oil -1.5% to $US39.95 a barrel
This column was produced in commercial partnership between The Sydney Morning Herald, The Age and IG
Information is of a general nature only.