Market Update & Important Indicators:
U.S. stocks fell intraday, pulled down by shares of banks and manufacturers, as investors worried whether a new round of tariffs would further fan the threat of a trade war. The declines were broad, with nine of the 11 sectors in the S&P 500 — and all 30 stocks in the Dow Jones Industrial Average — suffering losses. The blue-chip index extended its declines in the final hour of trading, eventually finishing down 724 points or 2.9% to 23,958. The S&P 500 fell 2.5% whilst the Nasdaq Composite dropped 2.4%. The Cboe Volatility Index, or VIX, a measure of expected swings in the S&P 500, rose 12% after shooting up more than 20% earlier in the day. Investors said anxiety over the ramifications of the Trump administration's plan to levy tariffs on imports from China contributed to the pullback. The moves come as the market was already trying to work through new tariffs on steel and aluminium imports, along with worries about rising interest rates. The U.S. gold price was slightly weaker overnight, falling 0.2% to 1,328.60 US$/oz.
European stocks finished at their lowest level in three weeks, hit hard by worries about a global trade war as the U.S. took steps toward slapping tariffs on China, a move that could hurt economic growth worldwide just as business activity in the Eurozone is showing signs of slowing. The Bank of England kept its interest-rate policy on hold as expected, and did little to dispel expectations that it could tighten policy at its May meeting. The Stoxx Europe 600 index fell 1.6% to end at 369.15, notching its lowest close since March 2, according to FactSet data. The U.K.'s FTSE 100 index dropped 1.2% to end at 6,952.59.
Asian stock markets outside China strengthened, after the Federal Reserve raised interest rates but stopped short of signalling a faster pace of increases for this year. Shares in China fell after the Fed's move prompted the People's Bank of China and Hong Kong's de facto central bank to raise rates, weighing on stocks in both markets. The Fed raised rates by a quarter percentage point, which was widely expected, and lifted its forecasts for gross domestic product growth for this year and next. While it also signalled that rates would rise over the next three years by more than it forecast in December, it stayed on track for three increases this year. The Nikkei Stock Average was 1% higher in the afternoon session as traders returned to work after a holiday. South Korea's Kospi gained 0.5% while markets in Malaysia, Indonesia and the Philippines were relieved by the Fed decision.
Australia's stock market lagged throughout the day, though things improved some by day's end to limit the decline. Weakness in most sectors countered upbeat resource stocks, with the S&P/ASX 200 ending down 0.2% at 5937.2 after rising three of the prior four days. Overnight gains in crude oil and metals helped lift BHP Billiton, Rio Tinto and Woodside Petroleum more than 2%. But the major banks pulled back after a midweek rebound, led by CBA's 1.2% drop. Utilities also fell that amount while telecom heavyweight Telstra declined 1.8% to notch a fresh six-year low.
The London Metal Exchange’s 3-month copper contract traded lower overnight, falling 1.44% at 6,695/t. All the other base metals also finished lower. Aluminium prices fell 0.3% at 2,053/t, whilst tin prices dropped 0.7% to 20,915/t. Zinc prices fell further, dropping 1.5% to 3,201/t, whilst lead prices fell 1.6% to 2,364/t. Nickel prices were the biggest base metal loser overnight, shedding 2.0% at 13,146/t.
Recent Contacts & Presentations:
Australian Mines Ltd (AUZ), Australian Finance Group (AFG), Paladin Energy Ltd (PDN), Cooper Energy Ltd (COE), Medibio Ltd (MEB), Botanix Pharmaceuticals Ltd (BOT), Salt Lake Potash Ltd (SO4), Golden Mile Resources Ltd (G88), NTM Gold Ltd (NTM), Ausmex Mining Group Ltd (AMG), Matrix C&E Ltd (MCE), Austal Ltd (ASB), Decmil Group Ltd (DCG), Ventnor Resources Ltd, Ausdrill Ltd (ASL), Alice Queen Ltd (AQX), PNX Metals Ltd (PNX), Alliance Resources Ltd (AGS), Myanmar Metals Ltd (MYL), Primary Gold Ltd (PGO), Sino Gas & Energy Holdings Ltd (SEH), Australis Oil & Gas Ltd (ATS), Explaurum Ltd (EXU), Whitebark Energy Ltd (WBE), Atrum Coal Ltd (ATU)
Please read Argonaut's Important Disclaimers & disclosures
Log in to the client area below to download the full Morning Note PDF