A third day of losses pushed the share market firmly into deficit for the week amid fears of a global trade war after the US announced tariffs on imported steel and aluminium.
The ASX 200 slid 60 points or 1% to 5913 by the halfway mark, positioning the index to end more than 80 points lower for the week. The index topped out at 6083 on Tuesday and has been in reverse ever since. Among this morning's losers: IT -1.5%, telecoms -1.5%, materials -1.1% and financials -0.9%. Gold was once again the only haven, rising 0.8%.
Overnight the Trump administration caught the market on the hop by announcing a 25% tariff on steel and 10% on aluminium from next week. The S&P 500 dived 1.33%, breaking its 100-day moving average and turning negative for the year once again. Analysts warned that the protectionist move would raise costs for domestic consumers and risked a trade war.
“Maybe you’re doing a service for few steel and aluminum companies but you are crushing the rest of the market because people know that this is not what people want to see and it’s going to be a big problem because this ripples through the market and if you are General Motors you could be suddenly paying more for aluminum or steel,” Ian Winer, head of equities at Wedbush Securities in the US, told MarketWatch, “Either your margins are going to be hit or you’re raising prices.”
Asian markets recoiled. China's Shanghai Composite shed 0.67%, Hong Kong's Hang Seng 1.4% and Japan's Nikkei 2.75%. S&P 500 futures were recently up 1.25 points or 0.05%.
Crude oil futures bounced 15 cents or 0.25% this morning to US$61.14 a barrel. Gold futures jumped $12.70 or 0.97% to US$1,317.80 an ounce. The dollar was buying 77.62 US cents.
Don't like the look of the XJO daily at the moment. The index appears to have put in a second 'lower high' this week, raising the prospect that we retest the 5800 level in the next few weeks and perhaps set a new 'lower low'. In other words, the market may be slipping into a downtrend. Yikes. Don't want that. Specland has been resilient over the last couple of weeks but is not immune to broader trends. Waiting to see how this plays out. Trading: began the session with quick wins in TAR and ANW. Beer money from a part-fill in IAM. Half a pip from JAT. Decent end to a mediocre week.
