WHAT HAPPENED OVERNIGHT IN THE US:
· S&P -0.2%, clawed some back from opening slump (-0.8%) – but spoiled after hours by fresh escalation in China trade spat.
· USD had earlier added to last week’s rally, and that threatened renewed turmoil for EM, triggering 8% sell-off in Argentinian equities.
· But US insulated by energy with oil back at $75 (after news of damage to key Libyan export facility). Techs also proved safe haven again.
· But after-hrs, S&P futures -1%, took fright at Trump orders for trade officials to draw up another $200bn of Chinese imports for 10% tariffs – as well as threat of an additional $200bn beyond that – complaining of China’s unwillingness to change its “unfair practices related to the acquisition of American intellectual property & technology”. China’s commerce ministry immediately warned of “countermeasures”. US10yr yield dropped below 2.88%, leaving 2’s & 10 curve at just 36bps – flattest since ’07 financial crisis.
WHAT’S UP THIS MORNING IN THE EAST:
· Asia taking strain. China -3%, heading for a one-year low on biggest daily losses since March. Bulk commodities also getting whacked on fears for global trade. Dalian iron futures -5%, steel rebar -3%, coking coal -3%.
· Hong Kong -2.8%, also reopen after yday’s holiday with broad losses. Tencent -3% at HKD 397, once again testing 200dma.
· Australia unch, spared by defensives, as well as property after RBA minutes omitted prior reference to next move ‘up’ for rates. AUD <0.74 down half-a-percent to another one-year low, and that’s helped cushion losses for resources. BHP -1%, indicates London down 0.25%, though Rio -2.3%, looking down 2.5%.
SOUTH AFRICAN NEWS:
· Expect AllShare -0.75%. From SA close yday, gold +$5 ($1283), plat -$3 ($881), copper unch ($3.12/lb), oil +0.2% ($74.86), Dalian iron futures -5.2% (=spot c$60), USDZAR +1.3% (13.82), S&P +0.1%.
· Due today: BAT
· AGMs: MUR
TODAYS KEY DATA POINTS:
· 10am: Eurozone April Current Account
· 2.30pm: US May Housing Starts