By Deepta Bolaky
 @DeeptaGOMarkets

Equity Markets

Huawei resonated through the financial markets and caused a rout in the U.S. technology sector. Asian stocks were mixed as a reprieve with a 90-day license was granted in an attempt to limit unintended impacts on third parties using Huawei equipment or systems.

It was reported that 173 companies signed an “Open letter” to President Trump:

“On behalf of our hundreds of millions of footwear consumers and hundreds of thousands of employees, we ask that you immediately stop this action to increase their tax burden,” the group said. “Your proposal to add tariffs on all imports from China is asking the American consumer to foot the bill. It is time to bring this trade war to an end.” – Source: Bloomberg

Markets remain on edge and await for retaliation from China!

In the Australian share market, investors are finding support from the RBA minutes and Governor’s Lowe Speech indicating a June rate cut. As of writing, the benchmark is up by 17 points at 6,494.00.

Currency Markets

In the FX space, the US dollar edged higher against nearly all G10-peers as trade tensions escalated after the Chinese tech giant, Huawei was blacklisted.

Source: Bloomberg Terminal

The Antipodeans emerged as the worst performers against the U.S. dollar. The Aussie dollar was trading on the upside until the release of the RBA’s minutes and Governor Lowe’s speech. Both events paved the way to an increased likelihood of an interest rate cut in June.

RBA Minutes dated 7th of May: “… members considered the scenario where there was no further improvement in the labour market in the period ahead, recognising that in those circumstances a decrease in the cash rate would likely be appropriate.”

Governor Lowe’s speech: “ In this scenario, we judged that inflation was likely to remain low relative to the target and that a decrease in the cash rate would likely be appropriate. A lower cash rate would support employment growth and bring forward the time when inflation is consistent with the target. Given this assessment, at our meeting in two weeks’ time, we will consider the case for lower interest rates.”

The Aussie dollar was unable to hold on to the relief rally brought by the Federal Election and is currently at 68.73 US cents.

Oil Markets

Oil prices are finding support on the US-Iran tensions and OPEC output cuts ahead of the API report this afternoon. WTI is trading at $63.55 while Brent Crude is in the vicinity of $71.50.

Looking Ahead

Existing Home Sales (US)

Fed’s Rosengren Speech (US)

GDT Price Index (New Zealand)