Australian market set for cautious open as US-China trade tensions rise again

The Australian market was set for a cautious open on Monday amid reports that the U.S. could be imposing new tariffs on $200 billion of Chinese goods this week.

In Australia, SPI futures were at 6,180 as compared to the ASX 200's last close at 6,165.3.

Japan's markets were closed for the day in observance of Respect for the Aged Day.

In U.S. market action last Friday, the S&P 500 saw a slight gain to close at 2,904.98, while the Dow Jones Industrial Average rose by 8.68 points at 26,154.67 and the Nasdaq Composite slid 0.1 percent to 8,010.04.

The gains on Wall Street were largely kept in check following a report by Bloomberg that U.S. President Donald Trump still wanted to impose tariffs on $200 billion on Chinese goods despite attempts by Washington to reopen trade talks with Beijing.

On Sunday, a source told CNBC that that the new round of tariffs on Chinese goods was being readied ahead of the scheduled trade talks with Beijing, in line with an earlier report by the Wall Street Journal on Saturday that said the White House was set to impose the tariffs at 10 percent instead of the earlier number of 25 percent.

The Journal then followed up with another report on Sunday citing Chinese officials saying that Beijing could decline to participate in the proposed trade talks with the U.S. if Washington goes ahead with imposing the additional tariffs on Chinese imports.

The U.S. dollar index, which tracks the greenback against a basket of currencies, was at 94.959 as of 6:56 a.m. HK/SIN, largely holding on to its gains from last Friday.

"(The U.S. dollar) will take guidance this week from any trade discussion and bond and equity market movements," said Richard Grace, chief currency strategist and head of international economics at Commonwealth Bank of Australia.

The Japanese yen strengthened slightly against the dollar at 111.96 yen while the Australian dollar remained largely flat at $0.7151, as of 7:06 a.m. HK/SIN.

"This week, AUD/USD will take some guidance from the minutes of the (Reserve Bank of Australia's) September policy meeting on Tuesday. We don't expect much of a currency market reaction," said Grace.

Here is a look at the trading day ahead:

• Indonesia — Trade data for August at 12:00 p.m. HK/SIN
• Hong Kong — Port container throughput monthly estimates for August

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