Markets Live: ASX and $A falls on new tariff threat

Loading Chart...

10:40am

The Australian dollar has fallen to its lowest level against the US dollar in more than a year, briefly dipping below US74¢.

The Aussie has fallen more than 3.5 per cent in the past two weeks, falling this week particularly on the increasing US-China trade tensions.

CBA chief currency strategist analyst Richard Grace says that the Aussie dollar could continue to fall this week.

"In our view, AUD/USD will continue to trade on the defensive for two reasons: because the US-China trade spat is a risk to our constructive global growth outlook, and because AUD will not be able to avoid the re-emergence theme of global monetary policy divergence."

10:29am

The market came within 2.5 points of its 10-year intraday high but is now beginning to fall away from its high open.

The news of Trump's new tariffs is just beginning to hit the market and some stocks are beginning to fall.

BHP was up 0.92 per cent earlier but has now fallen to 0.64 per cent.

The S&P/ASX 200 index is currently up 28.8 points, or 0.47 per cent, at 6132.9.

10:21am

The Australian market has risen at the open this morning.

The S&P/ASX 200 index is up 38.5 points, or 0.6 per cent, at 6142.6.

CSL is leading the market this morning, with BHP, Macquarie, IAG and the major banks also lifting the index.

Orocobre has jumped at the open, up 3.5 per cent while Nine Entertainment is up 2.8 per cent.

Goodman is weighing the index only very slightly, down 1 per cent while Mirvac Group is down 1.8 per cent.

Mineral Resources is down 3.1 per cent followed by CYBG, down 2.1 per cent.

10:10am

U.S. President Donald Trump threatened on Monday to impose a 10 percent tariff on $200 billion of Chinese goods, escalating a tit-for-tat trade war with Beijing.

In a statement, Trump said he had asked the U.S. trade representative to identify the Chinese products to be subject to the new tariffs. He said the move would be in retaliation for China's decision to raise tariffs on $50 billion in U.S. goods.

"After the legal process is complete, these tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced," Trump said.

Washington and Beijing appeared increasingly headed toward open trade conflict after negotiations failed to resolve U.S. complaints over Chinese industrial policies, lack of market access in China and a $375 billion U.S. trade deficit.

On Friday, Trump said he was pushing ahead with a 25 percent tariff on $50 billion worth of Chinese products, prompting Beijing to respond in kind.

The Chinese response clearly angered Trump.

"China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology. Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong," he said.

Trump said if China increases its tariffs again in response to the latest U.S. move, "we will meet that action by pursuing additional tariffs on another $200 billion of goods."

Reuters

9:59am

Australian shares are poised to rise despite declines on Wall St, in Europe and Asia on fears of an escalating trade war between the US and China, the world's two largest economies.

On Friday, President Donald Trump said the US would slap put tariffs of as much as 25 per cent on some Chinese imports starting next month. Those tariffs target industrial and agricultural machinery, aerospace parts and communications technology.

China said it will raise import duties on $US34 billion ($45.7 billion) worth of American goods, including soybeans, electric cars and whiskey.

On Saturday the Trump administration launched an investigation into whether tariffs are needed on automobiles imported to the US as talks with Canada and Mexico over the North American Trade Agreement stalled.

Read the full Before the Bell overnight wrap here.

9:59am

SPONSORED POST

The ASX looks set to shrug off trade tensions and open higher., write John Kicklighter and Ilya Spivak.

Sentiment kicked off this week with another waver. And, yet again, the speculators attempted to shore up the speculative moorings before the dam broke.

Following in the footsteps of the Shanghai Composite dropping to near two year lows and a 1.4 percent tumble from Germany's DAX, the major US equity indices posted largest bearish gaps between their respective closes on Friday and opens Monday.

For some, this initial retreat was more consequential with the Dow and S&P 500 extending slow-motion reversals to the bullish leg through the opening half of the month.

For the Nasdaq, another slip was well contained by a rising trendline support that keeps the bulls engaged and seeking fresh record highs – likely until 7,200 breaks.

Read the full 8@eight here.

9:20am

A deal struck in late 2015 by AGL Energy under its then relatively new chief executive Andy Vesey has come back to haunt the electricity and gas retailer – again.

Federal energy minister Josh Frydenberg last Friday tore into AGL for the "very poor" and "irresponsible" decision to sell $2 billion of gas that ended up as exported LNG and has helped drive AGL's move to now consider importing gas.

It comes on top of the government's recent castigation of AGL over the slated closure of the Liddell coal generator in NSW, with the minister demanding answers on behalf of customers "paying more for their gas than they should be".

Angela Macdonald-Smith has the full story here.

8:58am

Good morning and welcome to the Markets Live blog for Tuesday.

Your editor today is William McInnes.

This blog is not intended as investment advice.

Fairfax Media with wires.