Markets WRAP: Rand closes at R13.77/$
OVERVIEW: Stocks rose in Europe and US equity futures turned higher at the start of a week that could be pivotal for the global trade outlook. The dollar strengthened for an eighth day. The Stoxx Europe 600 gained and contracts on the S&P 500, Dow Industrials and Nasdaq Composite all reversed earlier declines as earnings season is set to resume with the likes of Michelin reporting today.
Equities rallied in China as exchanges reopened after a holiday and ahead of high-level trade talks this week between Chinese Vice Premier Liu He, Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer in Beijing. The rest of the region traded mixed.
Japan’s securities markets are shut for a holiday. Yields on Treasuries and core European sovereign bonds edged higher. The pound stayed lower after the UK economy unexpectedly shrank in December. Trade tensions are ratcheting up as investors evaluate the prospects for a US-China deal before the March 1 deadline for higher tariffs, as warnings mount that the dispute is curbing the global economic expansion and denting corporate profits.
Washington is also in focus, with the US government potentially headed for another shutdown as political tensions flare between Congress and the president.
“We still have concerns about global growth and that centers on those US-China negotiations,” Kerry Craig, global market strategist at JPMorgan Asset Management, told Bloomberg TV from Melbourne.
“We’re unlikely to see any massive moves this week saying we’re going to get a deal on that.”
Elsewhere, WTI oil futures slipped toward $52 a barrel, while gold headed for its first drop in three sessions. The Swiss franc swooned almost 1% at the start of Asia trading Monday in a mini-recurrence of the “flash crash” that roiled FX markets early last month.
Here are some key events coming up: Earnings season continues with reports from companies including Michelin, Nissan, Cisco, Vivendi, Nvidia, Nestle, Coca-Cola and Credit Suisse. Sweden’s Riksbank is expected to keep interest rates at minus 0.25% on Wednesday after the first increase in more than seven years in December. Data Wednesday is expected to show US consumer prices rose 0.1% in January, after falling 0.1% in December.
If no deal is reached on the US-Mexico border wall, parts of the federal US government may shut down again later this week when stopgap government funding expires.
These are the main moves in markets:
The Stoxx Europe 600 Index rose 0.8% as of 11:19 London time. Futures on the S&P 500 Index rose 0.3%. The Shanghai Composite Index surged 1.4%, hitting the highest in almost 10 weeks. The MSCI World Index of developed countries rose 0.1%.
The Bloomberg Dollar Spot Index rose 0.2% with its eighth straight advance. The euro fell 0.1% to $1.131. The Swiss franc fell 0.2% to $1.0029. The British pound fell 0.1% to the weakest in three weeks. The Japanese yen declined 0.4% to the weakest in more than six weeks on the largest drop in more than a week.
The yield on 10-year Treasuries rose one basis point to 2.64%, the first advance in a week. Germany’s 10-year yield jumped two basis points to 0.11%, the first advance in a week. Italy’s 10-year yield sank seven basis points to 2.892%, the first retreat in a week.
Gold decreased 0.5% to $1,307.30 an ounce. West Texas Intermediate crude fell 0.7% to $52.33 a barrel. LME nickel rose 0.2% to $12,595 per metric ton. LME copper decreased 0.8% to $6,162.50 per metric ton. – Bloomberg