Originally published by Rivkin Securities
Two consecutive days of gains have brought US stocks back to positive for the week but both the Dow Jones Industrial Average and S&P 500 are still down over the past month. The Dow closed up 1% while the S&P 500 gained 0.7%. Tech stocks have rebounded over the last two days although the Nasdaq 100 underperformed the other two major indices overnight having gained just 0.5%. Tesla (NASDAQ:TSLA), whose stock had been pummelled, has rebounded substantially over the past two days, climbing 6.5% last night for a two-day gain of 20%. Amazon (NASDAQ:AMZN) stock has also bounced, climbing 6% this week after a sell-off that was partly caused by the general market weakness and partly due to President Trump’s tweets specifically attacking the company.
The market seems to have shaken off fears surrounding the trade dispute with China with some commentators suggesting that the current actions are just posturing and eventually an agreement will be made between the two countries that will involve little in the way of tariffs. This view does have some merit just based on the obvious detriment that some of the tariffs will have on both countries. The tariff on soybean imports by China, for example, will surely hurt both China and the US and it therefore is in the best interests of the politicians to resolve this dispute. Having said this, news reports this morning suggest President Trump is considering an additional swathe of tariffs on China.
Yesterday Australia released its trade balance data which showed a larger than expected surplus. Both imports and exports grew while our terms of trade (the relative prices of exports vs imports) improved for the quarter. Coal and iron ore continue to dominate our exports although wool exports grew substantially with a 25% increase. Tonight, US employment data will be released that is expected to see the unemployment rate tick down to just 4.0%. A strong employment report will bolster the Federal Reserve’s plan for interest rate hikes.
Data Releases:
- US Employment Data 10:30pm AEST