Eyes on Wall Street during U.S.-China tariff war

"Obviously, it may create some distortion in the market and this is what we want to avoid". In your inbox before the open, every day.

The Australian sharemarket has plummeted after renewed concerns about US-Chinese trade tensions led to large losses on Wall Street overnight.

Monday's slump on the S&P 500 was clearly sparked by Beijing's retaliation in the escalating trade battle, said Mr. Higgins, chief markets economist at Capital Economics.

Energy futures recovered, with US crude gaining 18 cents to $61.22 per barrel in electronic trading on the New York Mercantile Exchange.

The dollar advanced for a second day against major peers, including havens such as the Japanese yen and the Swiss franc.

The U.S. imported nearly $540 billion in goods from China in 2018, while exporting $120 billion.

Other similar comments were made by US President Trump and his administration throughout most of the first 4 months this year which helped fuel the sharp rebound in market optimism and equity prices. The VIX, however, is still far below the elevated levels it reached at the end of previous year when the S&P 500 came extremely close to entering a bear market, meaning a decline of 20% or more from a recent peak.

"No surprises, it's been a pretty gloomy day, continuing some of the worst losses we've seen in 2019 for the States", said CommSec market analyst James Tao.

According to BBC, US President Donald Trump had warned China not to raise levies but Beijing said it would not swallow any "bitter fruit" that harmed its interests.

Stocks came off their lows in afternoon trading Monday after Trump said he had not decided if he would slap tariffs on the remainder of Chinese goods. Businesses have said that with the increased taxes on imports, they will have to increase costs and pass them on to consumers.

Kansas City Fed President Esther George and Richmond Fed President Thomas Barkin make appearances. But China has taken so advantage of the USA for so many years, that they are way ahead (Our Presidents did not do the job).

Australian unemployment is out on Thursday. On May 14, the S&P 500 was up 0.78% as of 10:35 AM EDT.

With most of the major sectors now in the green, the Dow Jones Industrial Average is up a bit over 1%, or almost 300 points, and the S&P 500 is up a similar percentage. Technology stocks posted the largest percentage gains, climbing 1.6 per cent. The Hang Seng in Hong Kong dropped 1.5%, Japan's Nikkei 225 fell 0.6% and South Korea's Kospi ticked up 0.1%.

The S&P/ASX200 index was down 57.7 points, or 0.92 per cent, to 6239.9 while the all ordinaries was down 54.1 points, or 0.85 per cent, to 6327.2. European indexes were mostly down a bit more than 1%. The euro slipped to $1.1207 from $1.1231, and the British pound fell to $1.2905 from $1.2965.

The British pound dipped 0.2% to $1.2927.

The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was up 0.1%.

Advancing issues outnumbered decliners for a 2.18-to-1 ratio on the NYSE and a 1.92-to-1 ratio on the Nasdaq.

In Europe, London's FTSE 100, Germany's DAX and the Paris CAC 40 were up by between 0.5 and 1.1 per cent by about 6:15 a.m. ET. Brent crude, the global standard, gained $1.01 to $71.24 a barrel. Brent crude, the worldwide standard, picked up $1.08 to $71.31 per barrel.

-With assistance from Yakob Peterseil. Subscribe to MarketWatch's free Need to Know newsletter.

  • Zachary Reyes