Battered Asia shares try to rally on talk of Fed pause

SYDNEY (Reuters) – Asian share markets tried to find their footing on Friday as speculation the Federal Reserve might be “one-and-done” with U.S. rate hikes helped salve some wounds after a punishing week.

MSCI’s broadest index of Asia-Pacific shares outside Japan nudged up 0.l3 percent, though that followed a 1.8 percent drubbing on Thursday.

Japan’s Nikkei added 0.9 percent and E-Mini futures for the S&P 500 edged up 0.1 percent.

Concerns over Sino-U.S. relations remain heightened after the arrest of smartphone maker Huawei Technologies Co Ltd Chief Financial Officer Meng Wanzhou, which threatened to chill talks on some form of trade truce. [nL1N1YA1YR]

Markets also face a test from U.S. payrolls data later in the session amid speculation the economy was heading for a tough patch after years of solid growth.

Fed Chairman Jerome Powell emphasized the strength of the labor market in remarks made late Thursday. [nL1N1YB2GD]

Economists polled by Reuters forecast jobs rose by 200,000 in November after surging 250,000 in October. [nL1N1Y91Q8]

“A view has developed of U.S. growth normalizing a little faster than expected from the fiscal ‘sugar rush’, while inflationary pressures remain contained given the sharp fall in the oil price,” said National Australia Bank economist Tapa Strickland.

“Payrolls will be very important in helping to validate whether the economy is indeed slowing faster than expected.”

The mood brightened a little after the Wall Street Journal reported Fed officials are considering whether to signal a new wait-and-see mentality after a likely rate increase at their meeting in December. [nL4N1YB5N6]

That only added to recent feverish speculation the central bank was almost done on hiking rates given concerns on global growth and the disinflationary impact of collapsing oil prices.

Interest rate futures <0#FF:> rallied hard in massive volumes with the market now pricing in less than one hike next year. A month ago they had been wagering on three increases.

The news helped Wall Street pare early steep losses and the Dow ended 0.32 percent lower, while the S&P 500 lost 0.15 percent. The Nasdaq even added 0.42 percent.

FLATTENED

Treasuries extended their blistering rally, driving 10-year yields down to a three-month trough at 2.8260 percent, before last trading at 2.8973 percent.

Yields on two-year notes fell a huge 10 basis points at one stage on Thursday and were last at 2.77 percent.

Investors also steamrolled the yield curve to its flattest in over a decade, a trend that has historically presaged economic slowdowns and even recessions.

“The sort of flattening of the yield curve that we have seen recently usually indicates that investors think the Fed is nearing the end of a tightening cycle, and that rate cuts may even be on the horizon,” argued analysts at Capital Economics.

The seismic shock spread far and wide. Yields on 10-year paper sank to the lowest in six months in Germany, almost 12 months in Canada and 16 months in Australia.

The sea change in expectations took a toll on the U.S. dollar as bulls had been counting heavily on a steady widening rate differential to propel the currency.

The greenback eased against a basket of currencies to 96.779, and fell to 112.69 yen from a 113.85 high at the start of the week. The euro was up around 0.5 percent on the week so far at $1.1376.

Cyber currency Bitcoin took another spill, sliding more than 6 percent to $3,446.17.

In commodity markets, gold firmed to near a five-month peak as the dollar eased and the threat of higher interest rates waned. Spot gold stood at $1,237.61 per ounce.

Oil was less favored, however, falling nearly 3 percent on Thursday after OPEC and its allies ended a meeting without announcing a decision to cut crude output. [nL8N1YB1II]

OPEC had tentatively agreed to cut output but was waiting for a commitment from non-OPEC heavyweight Russia before deciding volumes. [O/R]

Brent futures had ended with a loss of $1.21 at $60.67 a barrel. U.S. crude edged up 6 cents in early trade Friday to $51.55, having lost $1.31 overnight.

Source: Read Full Article

Asia shares struggle to rally, oil skids further

SYDNEY (Reuters) – Asian shares fought to sustain the slimmest of recoveries on Friday amid speculation the Federal Reserve might be “one-and-done” with U.S. rate hikes, while oil fell anew as producers bickered over the details of an output cut.

MSCI’s broadest index of Asia-Pacific shares outside Japan nudged up 0.4 percent, though that followed a 1.8 percent drubbing on Thursday. Japan’s Nikkei added 0.8 percent.

Chinese shares, which were up earlier in the day, slipped into negative territory with the blue chips off 0.1 percent. E-Mini futures for the S&P 500 too started firmer but were last down 0.1 percent.

Spreadbetters, however, pointed to a strong start for Europe with London’s FTSE futures up 1.8 percent.

There was no escaping concerns over Sino-U.S. relations after the arrest of smartphone maker Huawei Technologies Co Ltd Chief Financial Officer Meng Wanzhou threatened to chill talks on some form of trade truce.

Markets also face a test from U.S. payrolls data later in the session amid speculation the economy was heading for a tough patch after years of solid growth.

Federal Reserve Chairman Jerome Powell emphasized the strength of the labor market in remarks made late Thursday.

Economists polled by Reuters forecast jobs rose by 200,000 in November after surging 250,000 in October.

“A view has developed of U.S. growth normalizing a little faster than expected from the fiscal ‘sugar rush’, while inflationary pressures remain contained given the sharp fall in the oil price,” said National Australia Bank economist Tapa Strickland.

“Payrolls will be very important in helping to validate whether the economy is indeed slowing faster than expected.”

The mood in risk-asset markets brightened a little after the Wall Street Journal reported Fed officials are considering whether to signal a new wait-and-see mentality after a likely rate increase at their meeting in December.

That only added to recent feverish speculation the central bank was almost done hiking rates given concerns about global growth and the disinflationary impact of collapsing oil prices.

Interest rate futures <0#FF:> rallied hard in massive volumes with the market now pricing in less than one hike next year. A month ago they had been wagering on three increases.

The news helped Wall Street pare steep losses and the Dow ended Thursday down 0.32 percent, while the S&P 500 lost 0.15 percent. The Nasdaq managed to advance 0.42 percent.

FLATTENED

Treasuries extended their blistering rally, driving 10-year yields down to a three-month trough at 2.8260 percent, before last trading at 2.89 percent.

Yields on two-year notes fell a huge 10 basis points at one stage on Thursday and were last at 2.76 percent.

Investors also steamrolled the yield curve to its flattest in over a decade, a trend that has historically presaged economic slowdowns and even recessions.

“The sort of flattening of the yield curve that we have seen recently usually indicates that investors think the Fed is nearing the end of a tightening cycle, and that rate cuts may even be on the horizon,” argued analysts at Capital Economics.

The seismic shock spread far and wide. Yields on 10-year paper sank to the lowest in six months in Germany, almost 12 months in Canada and 16 months in Australia.

The sea change in expectations took a toll on the U.S. dollar as bulls had been counting heavily on a steady widening rate differential to propel the currency.

The greenback eased against a basket of currencies to 96.803, and fell to 112.85 yen from a 113.85 high at the start of the week. The euro was up around 0.4 percent on the week so far at $1.1366.

Crptocurrency Bitcoin took a fresh spill to be down almost 18 percent for the week at $3,363.37.

In commodity markets, gold firmed to near a five-month peak as the dollar eased and the threat of higher interest rates waned. Spot gold stood at $1,239 per ounce.

Oil was less favored, however, falling further as OPEC delayed a decision on output cuts while awaiting support from non-OPEC heavyweight Russia.

Brent futures slipped 52 cents to $59.54 a barrel, while U.S. crude lost 40 cents to $51.09.

Source: Read Full Article

U.S. stock futures fall, Asia follows after Canada arrests Huawei CFO

TOKYO (Reuters) – U.S. stock futures tumbled on Thursday and Asian markets followed after Canadian authorities arrested a top executive of Chinese tech giant Huawei Technologies, fanning fears of further tensions between China and the United States.

S&P500 e-mini futures ESc1 fell almost 2 percent at one point in thin Asian morning trade and were last were down 0.7 percent.

The Canadian Justice Department said Meng Wanzhou, deputy chair of Huawei, was arrested early this month and that she was sought for extradition by the United States.

The arrest heightened the sense of a major collision between the world’s two largest economic powers not just over tariffs but also over technological hegemony.

It also came as an inversion in the U.S. yield curve has stoked global investor worries of a possible U.S. recession.

Japan’s Nikkei .N225 slid 0.8 percent, with benchmark indexes in South Korea .KS11 and Australia down 0.6 percent and 0.2 percent, respectively.

Currencies were steadier, with major currencies little changed so far.

The euro traded flat at $1.1347 EUR= while the dollar dipped 0.1 percent against the yen to 113.01 JPY=. The yuan CNH= is also unmoved at 6.8660 in the offshore trade.

U.S. Treasuries futures TYv1 were also almost flat.

The benchmark Treasury 10-year yield US10YT=RR fell to its lowest point since mid-September on Tuesday while the five-year yield dropped below the two-year yield, causing a so-called inversion in the yield curve.

Because an inverted curve has often tended to precede a recession, investors were spooked by that.

U.S. markets were closed on Wednesday to mark the death of former President George H.W. Bush.

Source: Read Full Article

Asia stocks advance, dollar struggles on signs of more cautious Fed

TOKYO (Reuters) – Asian stocks advanced on Thursday, tracking a surge on Wall Street, after the chairman of the U.S. Federal Reserve suggested it may nearing an end to its three-year rate tightening cycle, boosting interest in riskier assets.

The dollar struggled and U.S. Treasury yields dipped after Jerome Powell said on Wednesday that U.S. policy rates were “just below” neutral, less than two months after saying rates were probably “a long way” from that point.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.8 percent.

The Shanghai Composite Index edged up 0.2 percent, Australian stocks gained 0.5 percent and Japan’s Nikkei climbed 0.9 percent.

However, gains in Asia were tempered by investor jitters ahead of high-stakes trade talks between U.S. President Donald Trump and his Chinese counterpart Xi Jinping on Saturday on the sidelines of the G20 summit in Argentina.

Economists at ANZ pointed out that policy hawks in the Trump administration who want Washington to take a tough stance against Beijing appear to be in the ascendancy.

“They will want some concessions from China, not least of all on what they perceive is theft of intellectual

property and forced technology transfer,” wrote the ANZ economists.

“Thus, it would seem the prospect of the Trump-Xi meeting ending without a sustainable resolution to their differences is

relatively high.”

Analysts believe any signs of a thaw in U.S.-China tensions could trigger a knee-jerk rally but say the move would likely be short lived unless there are substantive compromise from both sides — most notably if Xi can persuade Trump to postpone a sharp tariff hike on Chinese goods due to take effect Jan. 1.

The Dow meanwhile rallied 2.5 percent and Nasdaq surged nearly 3 percent on Wednesday as Powell’s comments eased fears of a faster pace of rate hikes in 2019. [.N]

“Equities gained as Powell hinted of implementing fewer rate hikes when the economy is still doing well,” said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.

“The likelihood of slower U.S. monetary tightening caused the dollar to slump against currencies, particularly the euro, which could soon benefit from an ECB rate hike.”

The euro was a shade higher at $1.1374 after advancing 0.7 percent the previous day.

The dollar dipped 0.2 percent to 113.46 yen after being knocked down from a two-week high above 114.00 scaled overnight.

The Australian dollar, sensitive to shifts in broader risk sentiment, jumped more than 1 percent on Wednesday and last stood little changed at 0.7302 .

The dollar index against a basket of six major currencies was effectively flat at 96.805 following an overnight loss of 0.6 percent.

The U.S. two-year Treasury yield extended a modest decline from the previous day following Powell’s comments. The yield was down about 1 basis point at 2.796 percent.

Oil prices clawed back some ground from losses in the previous session, but an increase in U.S. crude inventories and uncertainty in the run to an OPEC meeting next week kept markets under pressure. [O/R]

U.S. crude futures were up 0.8 percent at $50.66 per barrel after sliding 2.5 percent the previous day.

Brent crude rose 0.6 percent to $59.13. It has slumped 21 percent this month, during which it fell to a 13-month trough of $58.41.

Source: Read Full Article

Hints of fewer rate hikes boost Wall Street, dollar dips

NEW YORK (Reuters) – Comments by U.S. Federal Reserve Chair Jerome Powell that interest rates were “just below” neutral propelled Wall Street higher on Wednesday, easing investor worries about the pace of interest rate hikes next year.

Hopes that the United States and China could call a trade war ceasefire at the upcoming G20 summit also helped stocks.

Meanwhile, the dollar retreated with potentially fewer rate increases on the horizon, and sterling rose after the Bank of England said the economy could shrink by as much as 8 percent in about a year after a no-deal Brexit.

Equity investors reacted favorably to the comments by Powell, who indicated there may not be as many future interest rate hikes from the central bank as was initially anticipated.

“He gave the market, and presumably President Trump, exactly what he wanted, which was an admission that the previously proposed path of future rate hikes was probably too aggressive,” said Oliver Pursche, chief market strategist at Bruderman Asset Management in New York.

U.S. President Donald Trump has recently been critical of the Fed for raising rates.

The Dow Jones Industrial Average rose 546.57 points, or 2.21 percent, to 25,295.3, the S&P 500 gained 45.25 points, or 1.69 percent, to 2,727.42 and the Nasdaq Composite added 148.44 points, or 2.1 percent, to 7,231.14.

The pan-European STOXX 600 index was down 0.01 percent and MSCI’s gauge of stocks across the globe gained 0.08 percent.

Earlier, hopes for a U.S.-China truce on trade had also helped lift equities.

Despite Trump’s tough remarks on the trade dispute ahead of Saturday’s meeting with Chinese President Xi Jinping, markets focused on comments by White House economic adviser Larry Kudlow, who indicated the two countries could call a truce.

“If they come out with nothing this weekend, it’s going to be very bad,” said Bernd Berg, global macro strategist at Swiss-based Woodman Asset Management.

Still, lingering caution that the two sides would leave the summit without an agreement capped gains in Europe, where auto stocks were under pressure after a report Trump may soon impose new import tariffs.

A rapprochement between the United States and China is seen as crucial, given that world growth and trade are already showing signs of an alarming slowdown.

Uncertainty over global trade as well as Brexit and Italy’s conflict with the European Union, had supported the U.S. dollar, but the dollar index dipped 0.35 percent after Powell’s comments.

The euro was up 0.74 percent to $1.1371.

Sterling, meanwhile, gained 0.7 percent after the Bank of England warned about the economic risks from exiting the European Union without a deal.

It said, Britain risks suffering an even bigger hit to its economy than during the global financial crisis 10 years ago if it leaves the European Union in a worst-case Brexit scenario.

“Our jobs is not to hope for the best but to prepare for the worst,” BoE Governor Mark Carney said.

Some market participants took the remarks as a good sign.

“I think he’s assuaging fears, saying that they’re willing to do anything they need to do,” said Michael Skordeles, U.S. macro strategist at SunTrust Advisory Services in Atlanta, regarding the bank’s response to Brexit. “That’s helping global markets generally.”

U.S. government bond prices were mixed following the Fed chair’s speech.

Benchmark 10-year notes last rose 3/32 in price to yield 3.0462 percent, from 3.057 percent.

The 30-year bond last fell 6/32 in price to yield 3.3302 percent, from 3.32 percent.

Oil slipped below $60 a barrel, continuing a recent run of losses, after U.S. crude inventories rose for the 10th week in a row and investors worried about whether OPEC-led producing countries would reach an accord next week on output cuts.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

World Trade Organization (WTO) outlook: tmsnrt.rs/2RlhEOc

Brent crude oil price slumps of 2008, 2014/2015 & 2018 in percent: tmsnrt.rs/2RiWkJ1

Graphic: Global assets in 2018 – tmsnrt.rs/2jvdmXl

Graphic: World FX rates in 2018 – tmsnrt.rs/2egbfVh

Graphic: Emerging markets in 2018 – tmsnrt.rs/2ihRugV

Graphic: MSCI All Country World Index Market Cap – tmsnrt.rs/2EmTD6j

Graphic: The rolling bear market – tmsnrt.rs/2QCzyvm

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Source: Read Full Article

World stocks climb to one-week high on hopes of trade reconciliation

LONDON (Reuters) – Hopes for a thaw in U.S.-China trade relations at the upcoming G20 summit helped world shares inch to a one-week high on Wednesday, though fears of a no-deal outcome weighed on European bourses and kept the dollar firm for the fourth day in a row.

While President Donald Trump talked tough on the trade tariffs issue ahead of a meeting with Chinese President Xi Jinping on Saturday, markets focused on comments by White House economic adviser Larry Kudlow, who held open the possibility that the two countries would reach a trade deal.

Kudlow’s comments helped Wall Street close higher and allowed Chinese and Japanese shares to rally 1 percent. MSCI’s index of Asian shares outside Japan gained 0.7 percent.

But the mood fizzled somewhat into the European session, with the pan-European index giving up opening gains to trade flat and Germany’s export-heavy bourse slipping 0.2 percent.

A Tuesday report that Trump may soon decide about new taxes on imported cars, still weighed on sentiment, keeping Europe’s auto sector shares 0.6 percent in the red

“An expectation is being priced into markets ahead of the G20 meeting that we will see some deal or at least a framework for a deal between Trump and (Chinese President) Xi Jinping,” said Bernd Berg, global macro strategist at Switzerland-based Woodman Asset Management.

“But if they come out with nothing this weekend, it’s going to be very bad.”

Futures pointed to a marginally firmer open on Wall Street.

The uncertainty over global trade as well as Brexit and Italy’s conflict with the European Union, have supported the U.S. dollar, which rose to a two-week high against a basket of currencies.

While the main driver for the greenback is the U.S. interest rate path, Rodrigo Catril, senior strategist at National Australia Bank, said it was also benefiting from the uncertain mood.

“Markets seem to be jumping at shadows at the moment and against this backdrop of uncertainty, the dollar remains the preferred option for weathering the storm,” Catril said.

With the currency index approaching 1-1/2-year highs reached earlier this month, traders are focusing on a speech at 1700 GMT by Federal Reserve Chair Jerome Powell to see if he offers clues on how many more times the Fed could raise interest rates.

While Fed Vice Chair Richard Clarida took a less dovish stance on Tuesday than some had expected and backed more rate rises, Powell and his colleagues have in recent weeks alluded to global volatility, leading many to speculate the bank’s three-year-long rate rise campaign could pause in 2019..

Berg said there had been some repricing of rate-rise expectations but said the Fed remained on track to tighten policy in December and early-2019 at least.

“My base case is the dollar will strengthen versus the euro and pound into year-end, as the euro zone and Britain are both struggling with their own problems — Brexit and Italy,” Berg said.

Sterling was flat around $1.2754, just off two-week lows, as British Prime Minister Theresa May battles to convince skeptical voters, lawmakers and businesses of the benefits of her Brexit deal.

May needs to win a Dec. 11 parliamentary vote on the deal she has negotiated with the EU to exit the bloc but with most parties opposed, that looks unlikely.

The euro is languishing at $1.1286, also near two-week lows to the dollar.

Investors are monitoring developments in Italy’s row with the EU over its budget spending, with Germany’s Handelsblatt and Italy’s La Stampa quoting EU commissioner Valdis Dombrovskis as saying the draft budget needed “substantial correction”.

Italian bond yields flatlined after sharp rallies that were triggered by what appeared to be a more conciliatory stance from the government over the issue.

On other markets, cryptocurrency bitcoin jumped 6 percent to above $4,000, extending its rebound from a low of $3,475 touched on Sunday.

Brent oil futures rose almost one percent ahead of next week’s OPEC meeting at which the producer club could decide on supply cuts to counter a crude glut. But prices are still down by almost one-third since early October.

Source: Read Full Article

Asian shares tentative ahead of Trump-Xi meeting, Fed speech

SYDNEY (Reuters) – Asian shares dithered on Wednesday and the dollar jumped to a near 1-1/2-year top as risk assets rowed back amid conflicting signals on prospects for de-escalating the Sino-U.S. trade dispute.

MSCI’s broadest index of Asia-Pacific shares outside Japan was last flat with Australian stocks the biggest drag.

Japan’s Nikkei gained 0.5 percent while South Korea’s KOSPI index was a touch firmer.

Asian markets had slipped on Tuesday after U.S. President Donald Trump said in an interview with the Wall Street Journal it was “highly unlikely” he would accept China’s request to hold off a planned increase in tariffs.

However, White House economic adviser Larry Kudlow sought to brighten the mood by confirming a dinner powwow between Trump and his Chinese counterpart Xi Jinping at an upcoming G20 gathering in Argentina. He also held open the possibility that the two countries would reach a trade deal.

The news boosted Wall Street’s main indexes which finished in positive territory after spending much of the session in the red.

However, it was still unclear whether the two sides had agreed on a formal agenda for the leaders’ meeting after the G20 summit and Kudlow said there were no scheduled talks on the ground for their advisers.

At the same time, a German magazine reported citing EU sources that Trump could impose tariffs on imported cars from next week, sending European auto stocks sharply lower.

“The market mood has turned cautious once again amid a flurry of trade headlines pointing to the prospect of a new round of trade tariffs ahead,” said Rodrigo Catril, senior strategist at National Australia Bank.

“The market seems to be jumping at shadows at the moment and against this backdrop of uncertainty the USD remains the preferred option for weathering the storm.”

The dollar index, which measures the greenback against a basket of major currencies, jumped overnight to 97.363 to edge towards a 1-1/2 year top of 97.661 set earlier this month.

Investors will now turn their attention to a speech on Wednesday by Federal Reserve Chair Jerome Powell for further clues on how many more times the central bank is likely to raise interest rates.

The event has become even more critical as signs of a global slowdown and nearly two months of market volatility have clouded an otherwise rosy U.S. picture, prompting speculations the Fed will go slow on rate hikes next year.

Traders are also watching the speech in light of Trump’s criticism of Powell in a newspaper interview, saying rising interest rates and other Fed policies were damaging the U.S. economy.

Elsewhere, in the foreign exchange market the pound was among the worst performing major currencies overnight.

British Prime Minister Theresa May will take her Brexit sales pitch to Scotland on Wednesday where she will likely face an uphill struggle to convince skeptical voters of the benefits of her deal for businesses.

May needs to win a vote in parliament on Dec. 11 to approve her deal but that looks difficult with an apparent large majority of lawmakers – including the Scottish National Party which has 35 of Scotland’s 59 seats in parliament – opposed to it.

Source: Read Full Article

Shares tick up on U.S. holiday sales hopes, but oil rout checks enthusiasm

TOKYO (Reuters) – Asian stocks and U.S. equity futures posted modest gains on Monday on hopes of solid U.S. holiday sales, though risk appetite was tempered as plunging oil prices fanned worries about the global economic outlook.

Investors were also cautious before U.S. and Chinese leaders meet for crucial talks at the end of the week as trade tensions between the economic superpowers showed no signs of easing.

“The U.S.-China summit is the biggest event for the rest of the year,” said Nobuhiko Kuramochi, chief strategist at Mizuho Securities.

European shares are seen opening higher, with spread-betters picking Britain’s FTSE .FTSE, France’s CAC .FCHI and Germany’s DAX .GDAXI to rise 0.4-0.5 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged up 0.6 percent, led by gains in Hong Kong and Taiwan, while Japan’s Nikkei .N225 advanced 0.8 percent.

In China, the Shanghai composite index .SSEC eased 0.3 percent.

U.S. stock futures ESc1 tacked on 0.6 percent in Asian trade, on hopes of brisk spending by U.S. consumers on so-called Black Friday and Cyber Monday sales.

Shoppers across the United States snapped up deep discounts on toys, clothing and electronics both online and at stores on Black Friday, giving retailers a strong start to their make-or-break holiday season.

U.S. stock markets had another tough session on Friday, when the benchmark S&P 500 .SPX hit its lowest close in more than six months as the energy sector took a beating in the wake of the oil slump.

The S&P 500 fell 0.66 percent to end about 10.2 percent down from its Sept. 20 closing record high, the second time this year it has entered a 10-percent correction after a rout in early February.

Oil prices bounced slightly after having dived 8 percent on Friday for their biggest weekly losses in almost three years as signs of slowing demand and rising U.S. production intensified fears of a supply glut.

So far this month, both WTI and Brent futures were down more than 20 percent, and unless they recover further this week the losses would mark their biggest fall since October 2008.

U.S. crude futures CLc1 last fetched $51.12 per barrel, up 1.4 percent on the day and off Friday’s low of $50.15.

Brent crude futures LCOc1 last stood at $59.39 per barrel, up 2.3 percent in Asia.

“COLD WAR”

U.S. President Donald Trump and his Chinese counterpart Xi Jinping are expected to hold talks on the sidelines of a G20 summit in Argentina at the end of this month.

Barring any deals there, the U.S. tariffs on $200 billion goods, introduced in late September, are likely to be raised to a proposed 25 percent next year from 10 percent.

“July-September corporate earnings have hardly been affected by the latest tariffs. It’s in the next earnings that we will see the impact. And if the tariffs are raised further next year, earnings will be hit further,” said Mizuho’s Kuramochi.

Some market players say investor worries go well beyond trade issues, noting the decline in global stocks and oil prices began right after U.S. Vice President Mike Pence intensified pressure on China in a speech on Oct. 4.

(GRAPHIC: Cold War shivers? – tmsnrt.rs/2PUiaGp)

In that speech, Pence highlighted disputes with China on wide-ranging issues from cyber attacks, Taiwan, freedom of the seas to human rights, accusing Chinese security agencies of masterminding the “wholesale theft of American technology,” including military blueprints.

“Pence’s speech is a start of the cold war,” said a currency trader at a U.S. bank, meaning global supply chains would be put at risk. “And we have a slowdown in iPhones sales and all that. Bearish factors are piling up,” he said.

Already, the global economy is showing cracks with businesses wary about investment amid the rising headwinds to earning growth.

A survey on Friday showed euro zone business growth has been much weaker than expected this month as slowing global economic momentum and a U.S.-led trade war have led to a sharp fall in exports.

IHS Markit’s Flash Composite Purchasing Managers’ Index for the euro zone EUPMCF=ECI fell to 52.4 in November, its lowest since late 2014.

That put pressure on the euro. The single currency traded at $1.1348 EUR=, little changed in Asia after a 0.6 percent drop on Friday.

Germany’s 10-year bond yield also fell to 0.331 percent DE10YT=TWEB its lowest since early September.

The British pound hardly moved at $1.2818 GBP= after European Union leaders sealed a Brexit deal on Sunday.

Markets are now looking to whether the deal can get through a fractious British parliament which is set to vote on it just before the next EU summit on Dec. 13-14.

The yen edged down about 0.2 percent at 113.23 to the dollar JPY= on a rise in stocks.

The dollar’s index against a basket of six major currencies stood almost flat at 96.888, not far from this year’s top of 97.704 marked two weeks ago.

But it could lose momentum if Federal Reserve policy makers take a more cautious approach to future policy tightening amid concern of economic slowdown next year.

Chairman Jerome Powell will speak on Wednesday while Vice Chairman Richard Clarida’s speech is due on Tuesday. [FED/DIARY]

“If there are no dramatic changes at the weekend G20, then market focus will shift to how the Fed will deal with the current situation,” said Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui Asset Management.

“There are already some dovish comments from the Fed recently. While that would support risk assets, it could lead to a correction in the dollar which has become too strong.”

Source: Read Full Article

Asian shares tick up but oil rout dampens sentiment

TOKYO (Reuters) – Asian shares edged higher on Monday, though investors were cautious as plunging oil prices fanned worries about a dimming outlook for the global economy.

Markets are also bracing for a crucial meeting between U.S. and Chinese leaders at the end of the week as trade tensions between the economic superpowers showed no signs of easing.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged up 0.4 percent, led by gains in Taiwan shares following local elections, while Japan’s Nikkei .N225 advanced 0.6 percent.

In China, the Shanghai composite index .SSEC ticked up 0.3 percent.

On Wall Street, U.S. stocks lost ground on Friday, with the benchmark S&P 500 .SPX hitting its lowest close in more than six months as the energy sector was sold off in the wake of the oil slump.

The benchmark S&P 500 .SPX fell 0.66 percent to end about 10.2 percent down from its Sept. 20 closing record high, the second time this year it has entered a 10-percent correction after a rout in early February.

U.S. stock futures ESc1 rose 0.3 percent in Asian trade on Monday.

Oil prices traded near their lowest levels since October last year, having dived 8 percent on Friday for the biggest weekly losses in nearly three years, with rising U.S. production intensifying fears of a supply glut.

So far this month, both WTI and Brent futures were down more than 21 percent, on track for their biggest fall since October 2008 unless they recoup some of those losses this week.

In early Monday trade, U.S. crude futures CLc1 fetched $50.53 per barrel, slightly higher though not far from Friday’s low of $50.15.

Brent crude futures LCOc1 last stood at $58.99 per barrel, near Friday’s low of $58.41.

The oil woes also reflected anxiety over a heated trade war between the United States and China.

“The U.S.-China summit is the biggest event for the rest of the year,” said Nobuhiko Kuramochi, chief strategist at Mizuho Securities.

U.S. President Donald Trump and his Chinese counterpart Xi Jinping are expected to hold talks on the sidelines of a G20 summit in Argentina at the end of this month.

Barring any deals there, the U.S. tariffs on $200 billion goods are set to be raised to 25 percent next year from 10 percent, Kuramochi said.

Such a hike is likely to put a brake on the global economy, which is already showing cracks with businesses wary about investment amid the rising headwinds to earning growth.

A survey on Friday showed euro zone business growth has been much weaker than expected this month as slowing global economic momentum and a U.S.-led trade war have led to a sharp fall in exports.

IHS Markit’s Flash Composite Purchasing Managers’ Index for the euro zone EUPMCF=ECI fell to 52.4 in November, its lowest since late 2014.

That put pressure on the euro. The single currency traded at $1.1335 EUR=, little changed in Asia after a 0.6 percent drop on Friday.

Germany’s 10-year bond yield also fell to 0.331 percent DE10YT=TWEB its lowest since early September.

The British pound hardly moved at $1.2818 GBP= after European Union leaders sealed a Brexit deal on Sunday.

Markets are now looking to whether the deal can get through a fractious British parliament which is set to vote on it just before the next EU summit on Dec. 13-14.

The yen changed hands at 112.91 to the dollar JPY=.

The dollar’s index against a basket of six major currencies stood at 96.908, not far from this year’s top of 97.704 marked two weeks ago.

But it could lose momentum if Federal Reserve policy makers take a more cautious approach to future policy tightening. Chairman Jerome Powell will speak on Wednesday while Vice Chairman Richard Clarida’s speech is due on Tuesday. [FED/DIARY]

Source: Read Full Article

Asian shares tick up but oil rout dampens sentiment

TOKYO (Reuters) – Asian shares edged higher on Monday, though investors were cautious as plunging oil prices fanned worries about a dimming outlook for the global economy.

Markets are also bracing for a crucial meeting between U.S. and Chinese leaders at the end of the week as trade tensions between the economic superpowers showed no signs of easing.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged up 0.4 percent, led by gains in Taiwan shares following local elections, while Japan’s Nikkei .N225 advanced 0.6 percent.

In China, the Shanghai composite index .SSEC ticked up 0.3 percent.

On Wall Street, U.S. stocks lost ground on Friday, with the benchmark S&P 500 .SPX hitting its lowest close in more than six months as the energy sector was sold off in the wake of the oil slump.

The benchmark S&P 500 .SPX fell 0.66 percent to end about 10.2 percent down from its Sept. 20 closing record high, the second time this year it has entered a 10-percent correction after a rout in early February.

U.S. stock futures ESc1 rose 0.3 percent in Asian trade on Monday.

Oil prices traded near their lowest levels since October last year, having dived 8 percent on Friday for the biggest weekly losses in nearly three years, with rising U.S. production intensifying fears of a supply glut.

So far this month, both WTI and Brent futures were down more than 21 percent, on track for their biggest fall since October 2008 unless they recoup some of those losses this week.

In early Monday trade, U.S. crude futures CLc1 fetched $50.53 per barrel, slightly higher though not far from Friday’s low of $50.15.

Brent crude futures LCOc1 last stood at $58.99 per barrel, near Friday’s low of $58.41.

The oil woes also reflected anxiety over a heated trade war between the United States and China.

“The U.S.-China summit is the biggest event for the rest of the year,” said Nobuhiko Kuramochi, chief strategist at Mizuho Securities.

U.S. President Donald Trump and his Chinese counterpart Xi Jinping are expected to hold talks on the sidelines of a G20 summit in Argentina at the end of this month.

Barring any deals there, the U.S. tariffs on $200 billion goods are set to be raised to 25 percent next year from 10 percent, Kuramochi said.

Such a hike is likely to put a brake on the global economy, which is already showing cracks with businesses wary about investment amid the rising headwinds to earning growth.

A survey on Friday showed euro zone business growth has been much weaker than expected this month as slowing global economic momentum and a U.S.-led trade war have led to a sharp fall in exports.

IHS Markit’s Flash Composite Purchasing Managers’ Index for the euro zone EUPMCF=ECI fell to 52.4 in November, its lowest since late 2014.

That put pressure on the euro. The single currency traded at $1.1335 EUR=, little changed in Asia after a 0.6 percent drop on Friday.

Germany’s 10-year bond yield also fell to 0.331 percent DE10YT=TWEB its lowest since early September.

The British pound hardly moved at $1.2818 GBP= after European Union leaders sealed a Brexit deal on Sunday.

Markets are now looking to whether the deal can get through a fractious British parliament which is set to vote on it just before the next EU summit on Dec. 13-14.

The yen changed hands at 112.91 to the dollar JPY=.

The dollar’s index against a basket of six major currencies stood at 96.908, not far from this year’s top of 97.704 marked two weeks ago.

But it could lose momentum if Federal Reserve policy makers take a more cautious approach to future policy tightening. Chairman Jerome Powell will speak on Wednesday while Vice Chairman Richard Clarida’s speech is due on Tuesday. [FED/DIARY]

Source: Read Full Article