Wall Street fell for a third day in a row overnight Thursday, as early losses more than doubled in the wake of President trump announcing tariffs on the imports of steel (25%) and aluminium (10%).
The fall – by more than 1%, again for a third day in a row for the Dow – the first time in two years that it has fallen 1% or more three days straight – pushed the ASX futures market lower as well.
The SPI had been looking at a fall of 33 points just before Trump’s announcement just after 5 am Sydney time, this then surged to a fall of 61 points, or more than 1% at the close.
Coming after the 0.4% fall in the ASX 200 in February, Thursday’s 0.7% fall, March is already looking as though it will be in the red by more than 1.5% after just two days trading.
The ASX 200 year to date was down 0.8% at the end of February – yesterday’s fall took that to 1.5% and today’s drop could push it well past 2%.
More worrying though was that after Wall Street’s Wednesday’s late afternoon slump, and then the slide overnight, was the reaction in the huge US Treasury bond markets. There yields fell despite new Fed chair, Jerome Powell giving a clear indication the Fed will be proactive in lifting interest rates this year.
The yield on the key 10 year bond fell to 2.86% on Wednesday and to around 2.802% on Thursday – a sign that investors are selling out of shares and commodities and heading for the safest haven of all – US Treasuries. Thursday’s fall of 6 basis points was the largest in six months
Gold prices fell, then rebounded slightly in late after hours trading in Asia as some investors started buying it for safety. Oil was down as well.
The Dow fell 420 points, or about 1.7%, to close at 24,608, and at one stage was down close to 600 points.
The S&P 500 index finished down1.3% at 2,677, falling beneath a psychologically significant level at 2,678. Meanwhile, the Nasdaq Composite Index shed 1.3% at 7,180. S
The March 1 Trump tariff rout follows an ugly February for all three benchmarks. The Dow gave up 4.3%, its biggest monthly drop in more than two years and paring its advance over the past 12 months to 20%.
The S&P 500 and the Dow erased their year-to-date gains to turn negative for 2018, while the Dow was hanging on to a return for the year of about 3.6%, according to FactSet data.
US steel companies rose – shares in Nucor, the biggest electric arc furnace maker saw a 3.5% rise, while US Steel shares ended 5.7% higher, while AK Steel was up 9.4%.
But in a foretaste of what’s to come for the US economy, car sales dipped in February (before the tariffs). with General Motors and Ford both reporting sharp falls of 6.9% in the month