News & Analysis

Market bloodbath; trade tensions rise

Dec 6, 2018 | Market Updates

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OPEC meeting – all day
10:45 US Fed Chair Powell speaks
00:30 US Non-Farm payroll data
00:30 US unemployment rate
00:30 CAD unemployment rate
00:30 CAD employment change

It was another bloodbath for global markets overnight with ongoing trade talks between the United States and China keeping investors on edge. After plunging almost 800 points during Tuesday’s session, the Dow Jones fell another 79-points overnight or down 0.32%. The S&P 500 closed 4 points lower while the Nasdaq recovered from its losses to close higher. The index rose 29 points or up 0.42%. Major tech stocks Amazon, Netflix and Google all rising more than 1%.

On the other side of the world, the London FTSE closed 217 points lower, wiping more than £56 billion pounds off the index value. The FTSE is now at its lowest level since 2016. The German DAX was no better, slipping 389 points or 3.48% lower. In France, the CAC 40 slumped 3.31%. Uncertainty over Brexit also added to fears across European markets.

Tensions over a trade deal between the United States and China escalated yesterday, after Huawei CFO Meng Wanzhou was arrested in Canada. The Chinese executive has been accused of violating U.S. sanctions against Iran. Huawei released a statement to the public claiming it was not aware of any wrongdoing by its CFO. However, being one of the world’s largest telco companies, the arrest has caused further doubts a trade deal will be reached between the two nations. U.S. President Donald Trump and Chinese leader Xi Jinping agreed on a 90-day trade truce last weekend, after threatening each other with higher tariffs on imports.

Traders weren’t just selling off stocks. Oil prices took another tumble, with U.S. Crude falling to US$51.82 a barrel, while Brent dropped to US$60.33 a barrel. It comes after OPEC failed to reach an agreement on supply cuts during a lengthy meeting overnight. The cartel will continue its discussions on production tonight with non-OPEC partners, including Russia and Mexico.

Locally, Australian shares are set to fall at the open with the SPI Futures down 3-points. U.S. Federal Reserve Jerome Powell will speak on the economy at an event in Washington later today. Investors will be keeping an eye on the language used by Powell and whether the Fed will still consider raising rates later this month. The United States will also release it latest unemployment and non-farm payroll figures tonight.

Sources: CNBC & Bloomberg

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