ASX seen lower as Wall St plunges to start quarter

Australian stocks appear poised to fall at the open after a plunge on Wall Street. RBA rate decision ahead. ASX futures were last quoted up 10 points on March 29. The Australian dollar slipped.

Shares tumbled in New York at the start of the second quarter, as nerves frayed with President Donald Trump's continuing assault on Amazon as well as China's retaliatory tariffs on a range of US-made products.

The tech sector was particularly hard hit, extending losses triggered by Facebook's recent user data scandal.

The Dow shed more than 700 points at one point in midafternoon trading in New York before ending the day 458 points lower. The biggest losers: Intel, Cisco, Walmart and Nike. Both the S&P 500 and the Nasdaq also plunged.

The S&P 500 closed below its average price for the past 200 days for the first time since June 2016. The index is now lower by more than 10 per cent from its January record. The Cboe Volatility Index jumped to 23.

Intel was hammered after Bloomberg reported that Apple is planning to use its own chips in Mac computers beginning as early as 2020, replacing processors from Intel, according to people familiar with the plans.

Bonds erased declines and gold spiked higher as the equity selling picked up steam.

"This is definitely a flight to safety type of market," Peter Jankovskis, co-chief investment officer at Oakbrook Investments, told Bloomberg. "You're seeing people coming out of the stocks that had been performing well. There'd been various stories that momentum was extended in the market place, and I would say today's activity supports that trying to unwind a bit."

The yield on the US 10-year Treasury note dipped one basis point to 2.73 per cent. The spot dollar index edged up 0.1 per cent.

As for the RBA's pending decision. TD Securities said it is expecting "a copy and paste job from the previous statement".

"We are focused on AUDUSD where the pair has neared 3yr trend support located around 0.76," TD also said. "We note that against a backdrop of softer data, contentious trade rhetoric, more lively equity vol, we see little reason to be owning AUD at the moment. In this regard, we do not rule out a move towards the 50% fibo retracement area of the cyclical lows and 2018 highs around 0.7480/0.7500."

Today's Agenda

Local data: AiG perf of manufacturing March, CoreLogic house prices March, ANZ job ads March, RBA board meeting and cash rate decision

Overseas data: Euro zone Markit manufacturing PMI March, UK Markit/CIPS services PMI March

Market Highlights

AUD -0.2% to 76.64 US cents

On Wall St: Dow -1.9%, S&P 500 -2.2%, Nasdaq -2.7%

In New York, BHP -1.7% Rio -0.4%

European markets closed on Monday

Spot gold +1.4% to $US1343.45 an ounce

Brent crude -2.3% to $US67.76 a barrel

US oil -2.9% to $US63.08 a barrel

Iron ore +1.2% to $US65.80 a tonne

Dalian iron ore +0.9% to 452 yuan

LME closed on Monday

10-year bond yield: US 2.73%, Germany 0.49%, Australia 2.60%

From Today's Financial Review

Exclusive: Trade war worse than 2009 recession: A global trade war would tip much of Europe, the UK, and Canada into recession and cost as many as 285,000 Australian jobs, according to KPMG.

Chanticleer: Is Blue Sky 'missing' $2.5b?: Investors in Blue Sky Alternative Investments will have a stark choice on Tuesday – either believe the company, which says it has $4 billion in audited fee earning assets, or trust Glaucus Research, who say it has $1.5 billion.

Tech stock plunge a 'speed bump', not bubble: Big tech stocks face risks from tighter regulation, trade skirmishes and an end to ultra-low interest rates, but Silicon Valley will dominate the economy for years to come.

United States

Wall Street shares plunged on Monday as investors fled technology stocks amid resurgent trade war worries, with key indexes trading below their 200-day moving averages and the S&P 500 closing below that pivotal technical level for the first time since Britain's vote to leave the European Union in June 2016.

"It's more complicated than just a tech sell-off. What's hurting everything is that the S&P went through its 200-day moving average," said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago. "That attracts momentum sellers and they don't care what the fundamentals are."

The Dow Jones Industrial Average fell 458.92 points, or 1.9 per cent, to 23,644.19 after dipping below its 200-day moving average. The S&P 500 fell 58.99 points, or 2.3 per cent, to 2581.88 and the Nasdaq Composite dropped 193.33 points, or 2.7 per cent, to 6870.12.

All 11 major sectors of the S&P 500 closed lower, with the biggest losses seen by the consumer discretionary and technology indexes, which were down 2.8 per cent and 2.5 per cent, respectively.

Health insurer Humana's shares closed up 4.4 per cent on news it was in talks with Walmart to expand their partnership or possibly be acquired by the retailer. Walmart stock fell 3.8 per cent

The ISM said its index of national factory activity in the US slipped to a reading of 59.3 last month from 60.8 in February. A separate report from the Commerce Department showed construction spending edged up 0.1 per cent in February after being unchanged in January.

Gross domestic product growth estimates for the January-March quarter are mostly below a 2 per cent annualised rate. The economy grew at a 2.9 per cent pace in the fourth quarter.

Tesla was reported to be making 2000 of its Model 3 sedans per week, enough to ease stock market nerves around billionaire Elon Musk's electric car maker, according to tech website Jalopnik, citing an email from Musk to employees. Tesla shares recovered from an 8 per cent loss before the Jalopnik report filtered into markets to trade down 3.5 per cent on the day.

Europe

Most markets remained closed on Monday for the Easter break with trading set to resume on Tuesday.

Asia

Asian stocks began the new quarter on Monday with mild gains.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 per cent.

South Korea's KOSPI gained 0.6 per cent and Japan's Nikkei advanced 0.6 per cent. Hong Kong's Hang Seng added 0.3 per cent and Shanghai was up 0.4 per cent.

China slaps tariffs on US in warning shot to Trump: China strikes back against US tariffs on steel and aluminium with imposts of its own.

Currencies

Patience defines RBA rate stance: The Reserve Bank is expected to reaffirm that it's still in no rush to raise interest rates when its policymakers meet on Tuesday.

Commodities

The LME was closed on Monday for the Easter break.

Shanghai base metal prices made a positive start to the second quarter. Of the five key Shanghai base metals, only nickel rose in the first quarter, while copper and aluminium posted double-digit losses.

The most-traded May copper contract on the Shanghai Futures Exchange (ShFE) closed up 0.8 per cent at 50,390 yuan ($US8028.62) a tonne. Earlier in the session, it touched 50,600 yuan a tonne, its highest since March 23. ShFE aluminium ended up 1.9 per cent at 13,990 yuan a tonne, its highest close since March 20, bouncing back from a 17-month low seen on Friday.

Chicago Mercantile Exchange hog futures tumbled to their lowest in 16 months, hit by news that China raised tariffs on US pork by up to 25 per cent in response to higher duties on Chinese steel and aluminium by the United States.

Chinese steel futures rose for a fifth straight day on Monday amid expectations that demand in the world's top consumer of the building material will pick up along with construction activity, but prices came off the day's peaks.

Steelmaking raw materials iron ore, coking coal and coke also pared gains after rising as much as 7.6 per cent earlier in the session.

Along with hopes of a recovery in demand, production curbs in China's key steel city of Handan had helped spur prices early in the day as authorities sustained the fight against pollution.

The most-active rebar on the Shanghai Futures Exchange closed up 0.6 per cent at 3344 yuan ($US533) a tonne, after surging as much as 4.7 per cent to a nearly two-week high of 3480 yuan.

"I believe demand will pick up from the first half of April as the construction season gets underway so consumption of steel products will increase," said a Beijing-based trader.

Stocks of iron ore at China's ports reached a record high of 161.68 million tonnes on Friday, up 9 per cent this year, according to data tracked by SteelHome consultancy.

While iron ore prices have generally followed the trend in the steel market, traders say the mountain of stocks of the raw material at China's ports remain a major headwind, keeping sentiment bearish.

"Even as winter production cuts in China draw to a close and blast furnaces are gradually resuming operation, there has not been any big restocking demand as most mills are choosing to draw down on iron ore stocks built earlier," the Singapore Exchange said in a report.

Australian Sharemarket

Australian shares on Thursday wrapped up their worst March quarter performance since the GFC on a suitably sour note despite a modest rebound in the major banks.

The S&P/ASX 200 index slipped 33 points, or 0.6 per cent, to 5759 on the final session before the Easter break, bringing the losses for the year to 306 points, or 5 per cent. Investors have only suffered two worse March quarters over the past 25 years – a 15 per cent plunge in 2008 and a 6.3 per cent loss in 1994.