On Wednesday the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) sank lower after the trade war between the United States and China escalated. The benchmark index finished the day down 0.7% to 6,215.6 points.
Will the local market be able to bounce back on Thursday? Here are five things that could shape the day’s trade:
ASX futures pointing slightly lower.
According to the latest SPI futures, the local market is expected to open the day lower by 0.1% or 8 points on Thursday. This follows a night of heavy declines on Wall Street in response to the trade war escalations. The Dow Jones Industrial Average fell 0.9%, the S&P 500 dropped 0.7%, and the Nasdaq fell 0.55%.
Oil prices crash lower.
The shares of Oil Search Limited (ASX: OSH), Woodside Petroleum Limited (ASX: WPL), and the rest of the energy producers could come under significant pressure on Thursday after oil prices had their worst trading day in over a year and crashed lower. According to Bloomberg, the WTI crude oil price fell 4.5% and the Brent crude oil price dropped 6%.
US-China trade war.
On Wednesday the United States Trade Representative released a statement revealing that the Trump administration plans to slap 10% tariffs on an extra US$200 billion worth of Chinese imports. This follows China’s retaliation to last week’s US$34 billion trade tariff. According to the Wall Street Journal, China is looking to hit back in other ways. This could include delaying approvals of mergers and acquisitions involving U.S. companies, holding up licenses for U.S. firms, and delaying inspections of American products at borders.
Australian dollar tumbles.
The Australian dollar has dropped 1 cent or 1.4% over the last 24 hours to just under 73.6 U.S. cents after the U.S. dollar strengthened overnight. The greenback found strength after recent economic data pointed to rates rising twice more in 2018. This could be a boost to companies generating meaningful revenue in the U.S. such as Aristocrat Leisure Limited (ASX: ALL) and Treasury Wine Estates Ltd (ASX: TWE).
OceanaGold production update.
The OceanaGold Corp (ASX: OGC) share price could be on the move on Thursday after the gold miner released an update after the market closed. For the first-half of FY 2018 OceanaGold produced 68,597 ounces of gold and 7,808 tonnes of copper. As a result, it has increased its full-year production guidance range to between 500,000 to 540,000 ounces.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Treasury Wine Estates Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.