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Heavy falls on Wall Street and the threat of a fresh US-China trade war point to a subdued start to Australian share trade.

ASX SPI200 index futures eased seven points or 0.1 per cent as all three major US stock indices declined at least 2.5 per cent. Australian stocks anticipated Friday’s falls with a 276-point or 5 per cent dive as fund managers locked in profits after the market’s best month in 32 years.

The S&P 500 shed 82 points or 2.81 per cent as the White House ramped up the rhetoric against China and tech earnings disappointed. The Dow gave up 622 points or 2.55 per cent and the Nasdaq 285 points or 3.2 per cent.

US President Donald Trump raised the prospect of using trade tariffs to punish China for what he sees as its mishandling of the coronavirus pandemic. The White House is said to be frustrated at China’s failure to contain the COVID-19 virus and attempts to divert blame for its emergence. The strain first identified in the Chinese province of Wuhan has infected more than 3.5 million people around the world and caused immense economic damage. A report this morning said US officials believe China hid the extend of the outbreak to amass medical supplies.  

Trump’s economic advisor Larry Kudlow told CNBC on Friday, that China “are going to be held accountable for it. There’s no question about that. How, when, where and why – I’m going to leave that up to the president.”

“There’s fear of another trade war brewing in the middle off all this,” James Ragan, director of wealth management research at DA Davidson in the US, told CNBC. “The last thing you want to do in a recession is raise taxes.”

The impact of the pandemic was underlined by a string of disappointing quarterly updates. Retail powerhouse Amazon dived 7.6 per cent after announcing a surge in profits from increased online shopping would be eaten up by spending to meet demand and on increased protective measures for staff. Apple beat expectations but its shares slid 1.6 per cent after it declined to provide guidance for this quarter, citing uncertainty caused by virus lockdowns.

Dow components Exxon Mobil and Dow Inc slumped at least 7.1 per cent. Twenty-nine out of thirty Dow components finished lower. Walmart edged up 1.1 per cent.

A  measure of manufacturing activity slumped to an 11-year low amid factory lockdowns. However, the decline was not as sharp as economists predicted.   

Markets were ripe for a pullback following their best monthly performances in decades. The S&P 500 put on 12.7 per cent during April and the Dow 11.1 per cent, their strongest returns since 1987. Here, the S&P/ASX 200 gained 8.8 per cent, the biggest monthly tally in the index’s 20-year history.

The US energy sector sank 6 per cent even as US oil capped a volatile week with further gains. West Texas Intermediate crude settled 94 cents or 5 per cent ahead at US$19.78 a barrel, increasing its gain for the week to 16.8 per cent. The international benchmark, Brent crude, settled four cents or 0.2 per cent lower at US$26.44 a barrel for a weekly tally of 6.6 per cent.

BHP and Rio Tinto were slammed 7.76 per cent and 5.62 per cent, respectively, here on Friday but fared better in overseas trade. BHP’s US-listed stock dropped 5.51 per cent and its UK-listed stock 3.44 per cent. Rio Tinto shed 2.49 per cent in the US and 1.9 per cent in the UK. Chinese trade in iron ore was suspended on Friday for May Day public holidays.

Industrial metals declined at the prospect of a revived trade war. Benchmark copper on the London Metal Exchange dropped 1.5 per cent to US$5,0891 a tonne. Aluminium gave up 0.7 per cent, nickel 2 per cent, lead 0.4 per cent, zinc 1.6 per cent and tin 1.2 per cent.

Gold regained US$1,700 an ounce, but finished lower for a week when risk assets were back in favour. Gold for June delivery settled $6.70 or 0.4 per cent ahead at US$1,700.90 an ounce for a weekly loss of around 2 per cent.

The dollar eased 0.2 per cent this morning to 64.06 US cents.

A busy week of domestic economic reports starts with job ads and building approvals. The Reserve Bank sits tomorrow. Retail sales are due on Wednesday, trade data on Thursday and an RBA monetary policy statement on Friday. Another heavy week of US quarterly corporate reports commences tonight with Dolby, Tyson Foods and Royal Caribbean Cruises.  

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