Originally published by Rivkin Securities
Late yesterday, the Chinese government imposed $50bn worth of tariffs on imports of certain American made products, including soybeans and electric vehicles. These tariffs are in retaliation to the imposition of tariffs by the US on Chinese imports and the irony in the whole situation is that none of this is good for either country. The stock market didn’t respond well to this news and the Dow Jones Industrial Average opened down around 400 points. However, a sustained rally throughout the trading session brought the index back into positive territory and when all was said and done the Dow closed up almost 1%. The price action in stocks is exhibiting a high degree of volatility and >1% daily moves in either direction are becoming the rule rather than the exception.
Gold prices spiked by around $10 on the news of the China retaliation but they faded throughout the rest of the session to eventually close flat. Oil prices were also volatile. Initially oil fell as the trade war sparked fear that economic growth (and therefore oil demand) would be impacted by the tit for tat tariffs but later in the day the Department of Energy released oil inventory data which showed a significant crude draw last week. As the northern hemisphere goes into summer, gasoline demand usually picks up as vehicle usage increases.
Australian retail sales data yesterday showed a bigger than expected increase of 0.6% for the month of February and the prior month’s figure was revised up by 0.1% to 0.2%. This bodes well for retailers who have generally been struggling recently. Today Australia’s trade balance data will be released which is expected to again show a surplus as iron ore and coal exports continue to contribute significantly to the balance.
Data Releases:
- Australia Trade Balance 11:30am AEST