ASX to Fall as Trump Is Weighing Economic Sanctions on Chinese Officials, Businesses and Financial Institutions

By AAP
May 26, 2020 Updated: May 26, 2020

The ASX is poised to drop in early trade after reports the Trump administration is weighing economic sanctions on Chinese officials, businesses and financial institutions.

The SPI 200 futures contract was lower by 63 points, or 1.08 percent, to 5,744.0 at 0800 AEST on May 27, indicating losses in early trade.

IG Markets analyst Kyle Rodda said the drop would be “a bit of a breather” after the 2.93 percent rally on Tuesday.

US stocks overnight pared gains late in trading after Bloomberg News reported US President Donald Trump was considering sanctions, reinforcing comments earlier from White House adviser Larry Kudlow.

Kudlow said the president was “so miffed with China on the virus and other matters that the trade deal is not as important to him as it once was”.

He referred to Trump’s Phase 1 trade deal with China reached in January, which remains in tact.

Trump has said he is preparing to take action against China this week over its effort to impose national security laws on Hong Kong but has not given details.

The benchmark S&P 500 had crossed 3,000 points for the first time since March 5 before dropping back late in Tuesday’s session.

The S&P 500 closed 1.2 percent higher, and the Dow Jones Industrial Average gained nearly 530 points, or 2.2 percent. Markets around the world also rose.

In Australia on Tuesday, construction data for the March quarter is due.

The ASX enjoyed its best day in seven weeks on Tuesday.

The S&P/ASX200 benchmark index closed up 164.4 points, or 2.93 percent, at 5,780 points, while the All Ordinaries index was up 160 points, or 2.79 percent higher, at 5,889.9.

The Australian dollar was buying 66.46 US cents at 0800 AEST, higher from 65.91 US cents at the close of trade on Tuesday.

Steven Deare