US stocks, the US dollar and oil prices surged overnight on hopes a US deal with China to both slash their tariffs for 90 days will stick, and revive growth prospects. Gold, safe haven currencies and bond prices fell. Markets will now focus on US inflation data tonight.
In our deep-dive interview, ANZ Australia Economist Sophia Angala analyses why China’s domestic growth means more for Australia’s exporters than China’s exports.
5 things to know in 5 minutes:
The S&P 500 was up 3%, the Nasdaq was up 4%, the US dollar was up 1.5% and oil rose 1.8% by 4am Sydney/Melbourne time after the US and China announced a trade deal to de-escalate tensions and said they didn’t want to decouple their economies. ANZ Economist Bansi Madhavani says both sides agreed to cut their reciprocal 125% tariffs to 10%, although the pre-April 2 US tariffs of 20% will stay.
Bansi says the Fed will still want to be patient to see inflation doesn’t take off, before cutting rates again from September.
Safe haven currencies such as the euro and swiss franc fell sharply after the trade deal news, although the China-exposed Aussie and Kiwi dollars fell by less, says ANZ’s Head of FX Research Mahjabeen Zaman.
ANZ Senior International Economist Tom Kenny sees a rise in core US CPI inflation to 0.3% in April monthly data due tonight, up from 0.1% in March.
ANZ Economist Dhiraj Nim expects data later today to show India’s annual CPI inflation rate for April to be steady at around 3.3%, leaving room for more rate cuts by the Reserve Bank of India.
Cheers,
Bernard
PS: Catch you tomorrow with all the detail from tonight’s US and Indian inflation data.
