ASX set to dip, Wall Street edges higher; $A jumps
The S&P 500 was 0.2 per cent higher in its first trading after completing a stunning rebound from its springtime sell-off of roughly 20 per cent. The Dow Jones was up 133 points, or 0.3 per cent and the Nasdaq composite was 0.2 per cent higher.
The Australian sharemarket is set to edge lower, with futures at 5am AEST pointing to a slip of 2 points at the open. The ASX added 0.3 per cent on Monday to wrap up the best financial year for the index since the pandemic. The Australian dollar is stronger. It was 0.8 per cent higher at 65.79 US cents at 5.11am.
US stocks got a boost after Canada said it's rescinding a planned tax on US technology firms and resuming talks on trade with the United States. On Friday, US President Donald Trump had said he was suspending talks with Canada because of his anger with the tax, which he called 'a direct and blatant attack on our country.'
One of the main reasons US stocks came back so quickly from their springtime swoon has been hope that Trump will reach deals with other countries to lower his stiff proposed tariffs. Otherwise, the fear is that trade wars could stifle the economy and send inflation higher.
Many of Trump's announced tariffs are currently on pause, and they're scheduled to kick back into effect in a little more than a week.
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In an interview with Fox News Channel's Sunday Morning Futures, Trump said his administration will notify countries that the trade penalties will take effect unless there are deals with the United States. Letters will start going out 'pretty soon' before the approaching deadline, he said.
The US stock market being back at a record high could raise the risk of renewed escalations on tariffs, according to strategists at Deutsche Bank led by Parag Thatte and Binky Chadha. They point to the pattern in 2018 and 2019 of rallies for the market prompting escalations for tariffs, which then drove market pullbacks followed by relents on tariffs that then sparked rallies again.
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