Fears about the escalating trade war involving the United States are set to continue unnerving investors in Australia where share prices are expected to come under more pressure when trading starts on Wednesday.
At 9:30 am AEDT (10:30 pm GMT Tuesday) the S&P/ASX 200 March share price index (SPI) contract was trading 79 points (1.0%) lower than the previous settlement at 8,166, continuing the losing streak from Tuesday.
The negative tone was set in New York on Tuesday (Wednesday AEDT) where the Dow Jones Industrial Average lost 1.6% to finish at the lowest point in seven weeks, the S&P 500 dropped 1.2% after briefly hitting 17-week lows while the Nasdaq Composite edged down by 0.4%.
This followed announcements by China and Canada they would retaliate against U.S. tariffs by imposing tariffs of their own against American imports and the indication from Mexico it would follow the same course.
The Australian share market had closed 0.6% lower at 8,198.1 points on Tuesday after dropping to nine-week lows during intraday trade.
Morgans Financial private client adviser Lachlan Walsh said investors had hoped the tariffs were being used by U.S. President Trump as ‘bargaining chips’ but they were unnerved when they went ahead.
“The market has been pretty volatile and we’re telling people they’re going to be volatile for the next six to 12 months,” Walsh said.
“Markets have been down sharply with (China's and Canada's) retaliation. It’s not an overly positive tone and everyone is cautious.”
Walsh noted companies like Mineral Resources, Endeavour Group and Orica had been hit by their removal from the MSCI Global Standard Index.
CommSec said the the Australian Bureau of Statistics would issue gross domestic product (GDP) data for the December quarter at 11:30 am AEDT, Reserve Bank of Australia Deputy Governor Andrew Hauser was scheduled to speak and shares of Coles, QBE Insurance, Treasury Wine Estates and Woolworths would trade ex-dividend.
In the fixed interest markets, 10-year Australian Treasury bond yields were 0.05% higher at 4.370% while two-year rates were unchanged at 3.782%.
