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The latest shots fired by the US-China trade war were not as serious as investors feared, which triggered a rebound in the Australian dollar and Rally in foreign markets.
US President Donald Trump yesterday imposed a 10 percent tariff on Chinese imports of $ 200 billion, a level lower than the 25 percent he had announced a few weeks ago.
Beijing's retaliation against Washington was also weaker than expected, when they announced tariffs of 5 to 10 percent targeting US $ 60 billion worth of US products.
This prompted Mr. Trump to threaten, in a tweet, that he was going to step up the trade dispute if China targeted US agricultural or industrial workers, his main base of support.
Markets at 7:30 am (AEST):
- ASX SPI 200 + 0.5pc at 6 195, ASX 200 (closing Tuesday) -0.4pc at 6 162
- AUD: 72.22 US cents, 54.91 British pence, 61.85 euro cents, 81.13 Japanese yen, 1.10 New Zealand dollar
- United States: Dow Jones + 0.7pc at 26.247, S & P 500 + 0.5pc at 2.904, Nasdaq + 0.8pc at 7.956
- Europe: FTSE flat at 7.300, DAX + 0.5pc at 12.158, CAC + 0.3pc at 5.364, Euro Stoxx 50 at 3.358
- Asia: SSE (Shanghai): + 1.8 pc at 2,700, Hang Seng (HK): 27,085, Nikkei (Japan): + 1.4 pc at 23,421
- Commodities: Gross Brent + 1.1 pc at 78.91 USD / barrel, spot gold -0.2 pc at 1,197.61 USD / ounce, iron ore + 2.5 pc at 69.82 USD / ton
China has limited retaliatory levers on tariffs, said Anthony Saglimbene, global market strategist at Ameriprise Financial Services in Michigan.
Any escalation will likely involve his currency or make US corporate operations more difficult in China, but the immediate deterioration of the economic situation is likely to be minimal, he added.
"We expect this latest series of tariffs, the $ 200 billion US, will probably only increase consumer prices by 0.2 percentage points." This is nothing, "said M Saglimbene.
"The market is smart and it is felt throughout the year, and the price impact will probably be low on economic growth and low on corporate profits."
The rebound of the Australian dollar may be temporary
The Australian dollar fell slightly (+0.5 pc) at a three-week high at 72.2 US cents, and has been the G10's best performing currency over the past 24 hours.
It also rebounded to 54.9 British pence, 61.8 euro cents and 81 Japanese yen, levels that had fallen below previous weeks.
"While the Australian dollar is playing on the risky mood in the markets, it's a little surprising that the markets have taken the good news," said NAB Economic Director David de Garis.
Mr de Garis noted that many traders are betting on the local currency to continue to fall, before its unexpected rebound overnight.
"With regard to the Australian dollar, we also note that, even though it did not hit record highs, the positioning on the Australian dollar was very short and the absence of new bad news probably contributed to its mini- rebound."
The currency strategists of the Commonwealth Bank believe that the rise of the dollar could also be due to the comments of the Reserve Bank in its last minutes, published Tuesday.
The minutes indicated that "the next move in the cash rate would be more likely an increase than a decrease".
"The minutes of the September meeting of the RBA was a positive surprise for some market players," said Joseph Capurso, CBA's chief foreign exchange strategist.
"But with the trade dispute between the US and China likely to get worse, we think the Australian dollar will have a negative impact, potentially testing 70 US cents before the end of the year."
Global relief trade
The Australian stock market should start the day up, ASX futures gaining 28 points, or 0.5%.
It is likely to follow a strong lead overnight from foreign markets.
Asian markets rallied sharply as China's Shanghai Composite jumped 1.8% to 2,700.
In Europe, the London FTSE was stable at 7,300, while the German DAX rose 0.5% to 12,158.
Wall Street tech stocks pushed the Nasdaq to rebound 0.8% to 7,956.
The S & P 500 benchmark rose 0.5% and the Dow Jones first-class index added 185 points, or 0.7%, to 26,247.
New technologies have been bolstered by the announcement that the maker of Apple gadgets and Fitbit fitness would escape tariffs.
Apple's shares closed up 0.2% while Fitbit shares rose 6.4%.
Among the losers, Tesla sank 3.4 percent after announcing that it had received a request for US Justice Department documents regarding public statements by chief executive Elon Musk on the privatization of the company.
Topics:
economy and business finance,
Trade,
markets
stock market,
motto,
Australia,
United States
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