Investor confidence dips as US/EU trade tensions escalate

Stock Markets

Australian shares are poised to open lower today after US stocks ended down on Tuesday following the International Monetary Fund’s (IMF) prediction of continued slowing global economic growth amid escalating US/EU trade tensions. The IMP forecasts global growth to decline to 3.3% in 2019 from 3.6% in 2018 as fiscal stimulus winds down. Trade tensions between the US and Europe were induced on Monday after the US said it was considering $11 billion worth of retaliatory tariffs on a range of European goods in response to subsidies given to European airplane maker Airbus. The talks escalated overnight after the EU indicated that is was prepared to retaliate against two new US proposals that would target European goods with tariffs.

Wall Street’s major indexes closed lower overnight, amid rising trade tensions between the US and Europe and fears of economic slowdown triggered by the IMF cutting its global growth forecast for 2019.  The Dow Jones, S&P 500 and NASDAQ 100 ended Tuesday’s session down 190.44 (-0.72%) 17.57 (-0.61%) and 44.61 (-0.56%) points respectively.

The benchmark S&P/ASX200 index closed 0.4 points (+0.01%) higher on Tuesday, with the energy sector lifting 2% higher as WTI crude prices hit a five-month high on a resurgence of fighting in Libya.

ASX 200 futures are currently down 12 points.

Today’s data releases: AUS WBC-MI consumer confidence April, AUS RBA deputy governor Guy DeBelle speech, Japan machinery orders February, UK trade balance February, ECB policy meeting, US March CPI

Commodities and Currencies

Brent crude prices retraced slightly overnight and are currently sitting at US$70.61 (-0.69%), while WTI crude closed in positive territory at US$64.16 (+0.28%).

Iron ore prices are down 0.5% at US$94.85 per tonne.

The spot price of gold is currently up 0.55% at US$1304.68 with prices supported by recent weakness in the USD and a pause in the US stock rally.

The AUD is currently flat at US71.24¢.

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.