Market volatility rises as trade war fears intensify

High volatility was the hallmark of US stock market last week as global trade war fears came to fore after the US government imposed tariffs on steel and aluminum imports from European Union, Canada and Mexico. The SP 500 closed up 0.5% and the ICE dollar index rose 0.02% for the week.

The SP 500 closed lower Tuesday and Thursday in Memorial Day holiday shortened last week. The broad market index dropped 1.2% Tuesday after the US restated it will use 25% tariffs on $50 billion of Chinese goods unless Beijing addresses the issue of theft of American intellectual property. It recouped the previous day’s loss rallying 1.3% Wednesday led by energy shares. The SP 500 fell 1% Thursday after US imposed tariffs on steel and aluminum imports from the European Union, Canada and Mexico. It gained 1.1% on upbeat May jobs report.

The ICE US dollar index rose every session last week except Wednesday and Thursday. The dollar rose 0.2% Monday. It rallied 0.4% Tuesday as the S&P/Case-Shiller national index of home prices edged up 6.5% in March compared with a year ago. The ICE dollar index slumped 0.8% Wednesday as the first quarter GDP was downgraded to 2.2% annually instead of 2.3% of the initial reading. The dollar index slipped 0.1% Thursday. 3 The dollar gained 0.3% Friday after report the US created 223,000 new jobs in May, above an expected 190,000 addition to nonfarm payrolls.

The Reserve Bank of Australia interest rate meeting on Tuesday and the Australian GDP report on Wednesday are the major economic reports this week light on economic events. The Australian central bank is expected to hold interest rates at 1.5% while the Australian economic growth is forecast to accelerate to 2.7% over year in the first three months of 2018 from 2.4% in the fourth quarter of 2017.