ASX poised to open lower on the back of global growth concerns

Stock Markets

Australian shares are poised to open lower today after US stocks continued to slide lower on Wednesday after sinking bond yields and the escalating US/China trade war acted to rattle markets. Yesterday saw China gearing up to use its dominance of rare earths as a counter in its ongoing trade war with the US. China threatened to restrict rare earth exports to the US and may also implement other countermeasures. The share prices of rare earth producers rallied following the news on growing supply concerns. The US relies on China for about 80% of its rare earth which are used in a host of electronic components. Falling bond yields also weighed on market sentiment amid escalating trade tensions, slowing growth and tepid inflation. The 10-year Treasury note yield fell to its lowest level since September 2017 before rising to 2.26%.

Wall Street's major indexes closed lower on Wednesday, as concerns over potential slowing growth in the face of a trade war weighed on market sentiment. The Dow Jones, S&P 500 and Nasdaq fell by 221.36 (-0.87%), 19.37 (-0.69%) and 60.041 (-0.79%) points respectively.

The benchmark S&P/ASX200 index closed 44.809 (-0.69%) points lower on Wednesday after comments from US President Donald Trump gave fresh doubt over a resolution to the US's trade dispute with China. The telecommunications services sector was the only sector to close in the green, with the sector up 0.1%.

ASX 200 futures are currently down 31 points.

Today's data releases:  Private capex first quarter; NZ building permits April; US first-quarter GDP; US pending home sales April; US Fed vice chairman Clarida speaks

Commodities & Currencies

Oil prices fell in volatile trade on Wednesday, weighed down by equity markets as China signaled readiness to escalate the trade war with the United States, stoking concerns that an ongoing stand-off could hurt demand. WTI and Brent crude are currently sitting at US$59.22 (+0.70%) and US$69.45 (-0.94%) per barrel respectively.

Iron ore prices are currently up 0.066% at US$106.18 a tonne.

The spot price of gold is currently up 0.08% at US$1280.33 an ounce.

The AUD is currently up 0.01% at US69.18¢.

This article was written by Mithun Fernando – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via mithun.fernando@rivkin.com.au or by phoning +612 8302 3633.