Morning traders. Thanks loungers, especially @Ravgnome and @Patterns.
Outlook for the day: Positive after a pause in US tariffs on Mexico prompted Wall Street to pare back heavy initial losses.
ASX futures: up 39 points or 0.47%
Overnight themes:
- US stocks finished in the red but well off session lows after the US and Mexico struck a deal to delay US tariffs on Mexican imports by a month.
- The S&P 500 plunged 1.9% to a two-week low in early trade before mid-morning news of the tariff pause triggered a steep partial reversal. The broadest of the US stock benchmarks finished with a loss of 0.76%. The Dow slashed a morning loss of more than 650 points to 123 points or 0.28% by the close. The Nasdaq shed 1.2%.
- The early slump came as Wall Street reacted to weekend confirmation that the White House intended to press ahead with tariffs of 25% on imports from Mexico and Canada, and an additional 10% tariff on imports from China. Last night's partial recovery followed an announcement that US President Donald Trump and Mexican President Claudia Sheinbaum reached a deal to delay the new tariffs for a month while Mexico deployed 10,000 National Guard members to police the US border. Further negotiations will continue during the month-long pause to address US grievances related to the flow of drugs and migrants across the border, as well as Mexico's concerns. The iShares Mexico ETF bounced 2.49%.
- Trump was also due to hold talks with the leaders of Canada and China, encouraging speculation that a damaging trade war can still be averted. The Australian dollar bounced 0.7% to 61.85 US cents, rebounding from yesterday's post-pandemic low.
- “Call us deluded, but we still think that permanent tariffs on the U.S.‘s allies (Canada, Mexico) will not be a thing. That’s because concessions are an ‘easier’ way to deal with Trump’s ‘problems’ (from a cost-benefit and game-theoretic perspective), and Trump likes to make ‘deals’. Political and market pressure will also weigh on the parties to make concessions, as in 2018” - Thierry Wizman, global FX and rates strategist at Macquarie (per CNBC).
- Growth stocks dragged in a mixed market. The S&P tech and consumer discretionary sectors both lost more than 1.3%.
- Defensive consumer staples were the best of the sectors, gaining 0.68%. Other pockets of strength included utilities +0.46%, energy +0.42% and health +0.4%. The materials sector edged up 0.05%. Financials eased 0.43%.
- Haven-buying helped sweep gold to a new record. Spot gold hit an all-time high at US$2,830.40 an ounce before amending its rise to US$2,817.69, a gain of 0.73%. Gold futures gained 0.9%.
- Copper fell to a four-week low in London before rebounding. Benchmark copper dipped under US$9,000 a metric ton, then reversed to a gain of 0.69% at US$9,110 as the US dollar trimmed its rally. Aluminium and Zinc also advanced. Nickel, lead and tin declined.
- “Base metals are highly dependent on growth factors, and trade tensions create a negative feedback loop on global growth. The market is anticipating retaliatory measures, particularly from China, which could further impact metal prices negatively” - Kelvin Wong, OANDA senior market analyst, Asia Pacific (per Reuters).
Key events today:
- Earnings: Nick Scali, Region Group (source: Market Index)
- Mainland China resumes trading after week-long Lunar New Year break
- US earnings: Alphabet, AMD, Amcor - tonight
- US job openings - tonight
S&P 500: down 46 points or 0.76%
Dow: down 123 points or 0.28%
Nasdaq: down 235 points or 1.2%
Dollar: up 0.71% to 61.85 US cents
Iron ore (Singapore): down 0.7% to US$105.02 (China trade suspended for Lunar New Year)
Brent crude: up 29 US cents or 0.38% to US$75.96
Gold (futures): up US$22.10 or 0.8% to US$2,857.10
Gold (spot): up US$20.53 or 0.73% to US$2,817.69
Silver (spot): up 22 US cents or 0.71% to US$31.50
NYSE Arca Gold Bugs: up 1.65%
Bitcoin: up 3.77% to US$101,270
Copper (LME): up 0.69% to US$9,110
Nickel (LME): down 0.71% to US$15,122
Lithium carbonate (China spot battery grade): untraded at 9,458 yuan (last day Lunar New Year holiday)
Global X Lithium & Battery Tech ETF: down 2.12%
Uranium (spot): up 0.35% to US$71.50
Global X Uranium ETF (URA): down 1.1%
BHP: down 0.69% (US); down 0.78% (UK)
Rio Tinto: down 0.98% (US); down 1.13% (UK)
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