As of Tue, May 7, Singapore Time zone UTC+8
Dollar Index +0.03%, 97.53
USDJPY, -0.27%, $110.81
EURUSD, -0.01%, $1.1201
GBPUSD, -0.58 %, $1.3097
USDCAD, +0.20 %, $1.3447
AUDUSD, -0.45%, $0.6992
NZDUSD, -0.58%, $0.6607
U.S. Treasuries finished higher but lost steam as equities regained buying interest. The 2-yr yield declined one basis point to 2.31%, and the 10-yr yield declined three basis points to 2.50%. The U.S. Dollar Index finished little changed at 97.53. A turnaround in oil prices ($62.31/bbl, +0.38, +0.6%) amid rising tensions between the U.S. and Iran also provided some support for the energy space.
Trump said on Sunday that he will increase the tariff rate on $200 billion of imported Chinese goods to 25% from 10%, effective Friday. An additional $325 billion of imported goods could also face a 25% tax. The news rattled equity markets around the world and catalysed a 5.6% drop in China’s Shanghai Composite. Many market participants viewed Trump’s threat more as a negotiation tactic to speed up trade talks than a move prevent the completion of a trade deal. Confident that Trump would not try to upend a market coming off session highs by jeopardising a deal supported a reversal in stocks. China reportedly said it still plans to send a trade delegation to Washington this week.
Later this morning, there is RBA. The RBA has not changed its interest rates since August 2016, but this time may be different. The bank may finally oversee a cut from 1.50% to 1.25% (probability of close to 50%) after Q1 inflation came out flat. In addition, the global economy is slowing down and the housing sector is somewhat struggling. On the other hand, the labor market is doing well and so is the economy. Not all analysts see a rate cut coming now. The uncertainty implies a substantial Aussie reaction to the news.
S&P500, -0.45%, $2,932.47
Nasdaq, -0.66%, $7,794.0
Nikkei Futures, +0.43%, $22,128.0
S&P 500 declined 0.45% on Monday, although it had dropped as much as 1.6% after threats from Trump to increase China tariffs fuelled concerns about a trade deal. Investors, however, regrouped to buy the dip, lifting stocks off their lows on hopes that a trade deal will still be secured.
The energy sector (-0.1%) showed relative strength following positive reactions to Occidental Petroleum (OXY 58.77, +0.82, +1.4%) revising its offer to acquire Anadarko Petroleum (APC 75.49, +2.77, +3.8%) to include more cash. Shares of Chevron (CVX 118.40, +1.13, +1.0%) also outperformed on the news, as it likely defeats its proposal to acquire Anadarko for a premium.