Wall Street put in a mixed performance as the Russian scandal dogging President Donald Trump continued to flare up.
In a knee-jerk reaction, the Dow Jones plunged by 100 points early in the US trading day, after the President’s son, Donald Jr, released an email chain over Twitter in order to be “totally transparent”.
Market snapshot at 8:35am (AEST):
- ASX SPI 200 futures -0.1pc to 5,670, ASX 200 (Tuesday close) +0.1pc at 5,729
- AUD: 76.34 US cents, 59.41 British pence, 66.56 euro cents, 86.93 Japanese yen, NZ$1.06
- US: Dow Jones flat at 21,409, S&P 500 -0.1pc at 2,426, Nasdaq +0.3pc at 6,193
- Europe: FTSE -0.6pc to 7,330, DAX -0.1pc to 12,437, Eurostoxx 50 -0.4pc to 3,464
- Commodities: Brent crude +2.6pc to $US48.10/barrel, spot gold +0.2pc to $US1,217/ounce, iron ore +2.1pc to $US65.40/tonne
The emails showed that Mr Trump was keen to obtain information from Russian sources, particularly if it could damage Hillary Clinton’s election campaign last year.
“If it’s what you say I love it,” Mr Trump wrote in an email.
After the initial sell-off, the Dow managed to recover from the losses to finish the day flat.
Investors are concerned about political uncertainty because, whenever the Russian-collusion story develops, it delays President Trump from progressing his pro-business legislative agenda – namely, corporate tax cuts and his massive infrastructure spending plan.
But the US share market has tended to recover quickly after such news comes out – for example, the firing of FBI director James Comey and the discovery that he kept detailed notes of his discussions with the President.
However, NAB currency strategist Rodrigo Catril observed that other markets were a little less sanguine.
“On first impressions, reaction to Trump Junior’s email appears to have had a more lasting effect on US Treasury (UST) yields and the US dollar,” he wrote in a note.
“Prior to the email chain release, 10-year UST yields were trading at 2.39 per cent with the intraday chart showing a steady decline towards 2.36 per cent over the course of the night.”
What else affected the US market?
Technology, mining and energy were the best performing US stocks.
Energy shares, in particular, received a boost from a jump in oil prices.
Brent crude has continued to show signs of recovery – with prices climbing 1.6 per cent overnight.
It also helped that the US Energy Information Administration cut its forecast for next year’s crude output – to 9.9 million barrels a day (down from the June estimate of 10 million barrels).
The price of iron ore also rose sharply overnight – by 2.1 per cent – which boosted the performance of BHP and Rio Tinto on the New York stock exchange.
Share investors are also subdued because they are paying close attention to what the Federal Reserve has to say about the future of the US economy.
During a speech on Tuesday, Fed governor Lael Brainard said the US central bank would “soon” begin cutting its $US4.5 billion balance sheet, provided the economy continues to recover.
The Fed’s balance sheet is largely comprised of bonds it purchased to rescue the American economy during the global financial crisis.
Around midnight (AEST), Fed chair Janet Yellen will give her semi-annual testimony before Congress about the state of the US economy.
Traders will want to see whether Dr Yellen provides any clues about when the next US interest rate hike will happen.
The Australian market today
The Australian share market is expected to open slightly lower today – following weak leads from US and European markets.
ASX SPI futures have fallen, which points towards the negative direction of local trade this morning.
It will be a quiet day in terms of economic data being released today.
Westpac will release its monthly consumer sentiment report and the market expectation is that it will show sentiment falling by around 1.8 per cent.