Treasuries Climb; Oil Extends Gain; Dollar Drops

Global Stock Markets

The dollar gave up some of its recent gains on Thursday, declining as traders confronted a range of catalysts from political risks to missiles in the Middle East. European stocks slipped, U.S. equity futures were steady, and the pound reversed an advance after the Bank of England held interest rates.

Ten-year Treasury yields, which have been driving up the greenback and exacting pain on emerging markets, dipped back below 3 percent to push the dollar toward its first drop in five days.

The Stoxx Europe 600 Index drifted lower on what is a public holiday in various parts of the region -- markets are closed in countries including Switzerland, Sweden, and Austria. U.S. stock futures advanced ahead of a report on consumer prices.

Oil extended its climb in New York. The pound turned lower as policymakers at the central bank voted 7-2 to keep rates unchanged.

The news agenda is offering no respite to investors this week, with tension between Israel and Iran mounting just days after U.S. President Donald Trump roiled the international community with his decision to ditch a nuclear accord with the Islamic Republic.

 Meanwhile, the stage is set for a populist government to form in Italy, and traders are rapidly coming to terms with an election upset in Malaysia. Many will now be looking to American inflation data as a welcome diversion.

 Earlier in Asia, equities were broadly higher. Malaysian markets are closed, though trading in non-deliverable forwards suggested the ringgit will tumble Monday in the wake of the surprise ouster of the country’s ruling party.

The 2045-maturity dollar bond also declined. Developing markets more broadly signaled stability, and the MSCI Emerging Market Index rallied for a fourth day.

 Elsewhere, the New Zealand dollar slid after the central bank left the door open to an interest rate cut as inflation remains contained.

Stocks
The Stoxx Europe 600 Index declined 0.2 percent as of 7:03 a.m. New York time, the first retreat in a week.
Futures on the S&P 500 Index climbed 0.1 percent, reaching the highest in more than three weeks on its sixth consecutive advance.
The MSCI All-Country World Index increased 0.2 percent to the highest in three weeks.
The U.K.’s FTSE 100 Index fell 0.3 percent, the biggest fall in a week.
Germany’s DAX Index advanced 0.3 percent to the highest in 14 weeks.
The MSCI Emerging Market Index jumped 0.8 percent to the highest in more than a week on the biggest increase in almost two weeks.
The MSCI Asia Pacific Index jumped 0.6 percent to the highest in more than a week on the largest climb in almost two weeks.

Currencies
The euro gained 0.3 percent to $1.1887, the first advance in a week.
The British pound decreased 0.1 percent to $1.3533.
The Japanese yen advanced 0.1 percent to 109.59 per dollar, the largest gain in a week.

Bonds
The yield on 10-year Treasuries decreased three basis points to 2.97 percent, the biggest tumble in two weeks.
Germany’s 10-year yield declined one basis point to 0.55 percent, the largest fall in a week.
Britain’s 10-year yield declined one basis point to 1.457 percent, the biggest fall in a week.

Commodities
West Texas Intermediate crude increased 0.5 percent to $71.48 a barrel, the highest in more than three years.
Copper jumped 1.6 percent to $3.11 a pound, the highest in two weeks on the biggest jump in more than three weeks.
Gold advanced 0.3 percent to $1,316.98 an ounce, the highest in almost two weeks on the largest gain in a week.

U.S. stock futures rise as first quarter earnings off to strong start

Global Stock Markets

U.S. stock futures rose on Wednesday after the latest batch of results including Wall Street bank Morgan Stanley (MS.N) added to optimism about the U.S. corporate reporting season.

Morgan Stanley jumped 2.6 percent after the company reported a 40 percent jump in quarterly profit, helped by higher trading revenue, wrapping up earnings for the big U.S. banks.

The S&P 500 companies are expected to post an 18.6 percent rise in profits in the first quarter, the biggest increase in seven years, according to Thomson Reuters data.

At 6:58 a.m. ET, Dow e-minis 1YMc1 were up 63 points, or 0.25 percent. S&P 500 e-minis ESc1 were up 7.5 points, or 0.28 percent, and Nasdaq 100 e-minis NQc1 were up 18.25 points, or 0.27 percent.

The main indexes have gained solidly in the past two days after stellar results from industry bellwethers as well as strong economic data, helping investors turn attention away from geopolitical and trade tensions, which have upset the markets in the recent months.

U.S. President Donald Trump said on Wednesday that Mike Pompeo, the current CIA director and his nominee to be the top U.S. diplomat, met with North Korean leader Kim Jong Un last week.

The CBOE Volatility index .VIX, a measure of short-term stocks market volatility hit a level not seen in more than 5 weeks at 14.57. It was last down at 15.26 points.

United Airlines (UAL.N) rose 3.22 percent after the company reported a rise in profit, helped by higher fares.

CSX Corp (CSX.O) was up 4.3 percent after the No. 3 U.S. railroad operator topped profit estimates, benefiting from a cost-cutting drive.

IBM (IBM.N), a Dow component, fell about 5 percent after the technology company reported profit margins that fell short of Wall Street expectations.

Ebay (EBAY.O) jumped 4.2 percent after Morgan Stanley upgraded the stock by two notches to “overweight”, encouraged by the company’s payments initiatives.

Federal Reserve issues its so-called Beige Book, a compendium of anecdotes on the health of the economy drawn from the central bank’s sources across the nation.

Trump says U.S. will only rejoin Pacific trade pact if terms are improved

Asian Stock Markets

U.S. President Donald Trump said the United States would only join the Trans Pacific Partnership, a multinational trade deal his administration walked away from last year, if it offered “substantially better” terms than those provided under previous negotiations. 

His comments, made on Twitter late Thursday, came only hours after he had unexpectedly indicated the United States might rejoin the landmark pact, and amid heightened volatility in financial markets as Washington locked horns with China in a bitter trade dispute.

Trump had told Republican senators earlier in the day that he had asked United States Trade Representative Robert Lighthizer and White House economic adviser Larry Kudlow to re-open negotiations.

Policymakers in the Asia-Pacific region on Friday responded to the possibility of the U.S. rejoining the trade deal with scepticism.

Australian Prime Minister Malcolm Turnbull, commenting after Trump’s tweet, said it would be “great” to have the U.S. back in the pact though doubted it would happen.
“We’re certainly not counting on it,” Turnbull told reporters in Adelaide in South Australia.

The TPP, which now comprises 11 nations, was designed to cut trade barriers in some of the fastest-growing economies of the Asia-Pacific region and to counter China’s rising economic and diplomatic clout.

Trump, who opposed multilateral trade pacts in his election campaign in 2016 and criticized the TPP as a “horrible deal”, pulled the U.S. out of the pact in early 2017. He argued bilateral deals offered better terms for U.S. businesses and workers, and signaled an intention to raise trade barriers.

But Trump is struggling to get support from other countries for his recent threat to impose import tariffs on China and the U.S. farm lobby is arguing that retaliation by China would hit American agricultural exports.

Trade experts believe Trump is probably trying to placate his political base in the wake of criticism over the U.S.-China China tariff standoff.

“Well I think you have to take it seriously but I think there is an enormous chance that this is simply posturing or a tactical decision taken to placate concerned governors and senators from agricultural states that could be affected by China imposing tariffs,” said Charles Finny, a Wellington-based trade consultant and a former New Zealand government trade negotiator.

“I think it’s very important for people to realize, particularly given this most recent tweet, if there is a negotiation it will not be an easy one. It will take a long time and also there is huge risk around ratification.”

Even before Trump’s official withdrawal last year, U.S. participation in the pact was seen as increasingly unlikely due to opposition in the U.S. Congress.

The United States entered TPP negotiations in 2008. In 2016, then President Barack Obama’s administration abandoned attempts to push the pact through Congress.

The other 11 countries forged ahead with their own agreement without U.S. participation, and in the process eliminated chapters on investment, government procurement and intellectual property that were key planks of Washington’s demands.

New Zealand Prime Minister Jacinda Ardern, noting the progress made by the 11 countries after Trump abandoned the deal, also flagged challenges to the Untied States rejoining the pact.

The 11-member pact includes Mexico and Canada, which are in the process of re-negotiating the terms of the North American Free Trade Agreement with the United States.

A Canadian government official said on Thursday there had not been any formal outreach from the United States about the pact.

Japanese Prime Minister Shinzo Abe will meet Trump next week. Japan, a close U.S. ally, is a member of the TPP.

Global trade growth strong but at risk if conflict escalates, WTO says

Global Stock Markets

World trade in goods is maintaining a robust recovery, but it still might falter if trade tensions escalate further, the World Trade Organization said in its annual forecast on Thursday. 

Trade in goods will grow 4.4 percent this year after a decade averaging 3.0 percent a year following the financial crisis. Last year it grew 4.7 percent - much higher than the 3.6 percent forecast in September - and a further 4.0 percent rise is expected in 2019, the WTO said.

“However, this important progress could be quickly undermined if governments resort to restrictive trade policies, especially in a tit-for-tat process that could lead to an unmanageable escalation,” WTO Director-General Roberto Azevedo said in a statement. “A cycle of retaliation is the last thing the world economy needs.”

The United States and China have threatened each other with tens of billions of dollars’ worth of tariffs in recent weeks, leading to worries that Washington and Beijing may engage in an all-out trade war.

The WTO’s 2018 forecast puts world trade growth at the top end of previous expectations, since the organization said last September that it expected 2018 growth of 1.4 to 4.4 percent, most likely around 3.2 percent.

The latest forecast raises that to 3.1 to 5.5 percent based on current GDP forecasts, but “a continued escalation of trade restrictive policies could lead to a significantly lower figure,” the WTO said.

“These forecasts do not, and I repeat, they do not factor in the possibility of a dramatic escalation of trade restrictions,” Azevedo told a news conference.

“It is not possible to accurately map out the effects of a major escalation, but clearly they could be serious,” he said. “Poorer countries would stand to lose the most.”

New trade restrictions could trigger cycles of retaliation that weigh on global trade and output, but disruption could equally come from central banks raising interest rates rapidly or from geopolitical tensions, it said.

Cyber attacks were a further risk, with potentially even greater impact on trade in services than trade in goods. Trade in commercial services grew by 7.4 percent in 2017, after two years of weak or negative growth, the WTO said.

Last year’s growth in goods trade was led by Asia, by investment spending and by higher commodity prices. China’s rebalancing away from investment and towards consumption could mean it imports fewer capital goods, putting a drag on world trade growth.

“Less investment could also help reduce overcapacity in sensitive sectors such as steel and aluminum, thereby alleviating trade tensions,” the WTO said.

Steel and aluminum were the targets of one of U.S. President Donald Trump’s three big tariff announcements this year, each more controversial than the one before.

The steel and aluminum tariffs, justified on national security grounds, came soon after a restriction on imports of solar panels and washing machines. They preceded a huge package of tariffs that Trump has proposed to punish China for its alleged theft of U.S. intellectual property.

China’s commerce ministry said on Thursday that Washington’s attempts at dialogue were not sincere and vowed to retaliate should Trump escalate further.

China's Xi renews vow to open economy, cut tariffs as U.S. trade row deepens

Asian Stock Markets

Chinese President Xi Jinping promised on Tuesday to open the country’s economy further and lower import tariffs on products like cars, in a speech seen as an attempt to defuse an escalating trade dispute with the United States.

While much of his pledges were reiterations of previously announced reforms that foreign businesses say are long overdue, Xi’s comments sent stock markets and the U.S. dollar higher on hopes of a compromise that could avert a trade war.

Xi said China will widen market access for foreign investors, addressing a chief complaint of its trading partners and a point of contention for U.S. President Donald Trump’s administration, which has threatened billions of dollars in tariffs on Chinese goods.

Trump struck a conciliatory tone in response to Xi’s speech, saying in a post on Twitter that he was “thankful” for the Chinese leader’s kind words on tariffs and access for U.S. automakers, as well as his “enlightenment” on the issue of intellectual property.

“We will make great progress together!” Trump tweeted.

Washington charges that Chinese companies steal the trade secrets of American companies and force them into joint ventures to get hold of their technology, an issue that is at the center of Trump’s current tariff threats.

The latest comments from both leaders appear to reinforce a view that a full-scale trade war can be averted, although there have been no talks between the world’s two economic superpowers since the U.S. tariffs were announced.

“But of course actions speak louder than words. We will keep an eye on the progress of those opening-up measures.”

The speech at the Boao Forum for Asia in the southern province of Hainan had been widely anticipated as one of Xi’s first major addresses in a year in which the ruling Communist Party marks the 40th anniversary of its landmark economic reforms and opening up under former leader Deng Xiaoping.

Xi said China would raise the foreign ownership limit in the automobile, shipbuilding and aircraft sectors “as soon as possible” and push previously announced measures to open the financial sector.
“This year, we will considerably reduce auto import tariffs, and at the same time reduce import tariffs on some other products,” Xi said.

He said “Cold War mentality” and arrogance had become obsolete and would be repudiated. His speech did not specifically mention the United States or its trade policies, which have been assailed by Chinese state media in recent days.

Vice Premier Liu He had already vowed at the World Economic Forum in January that China would roll out fresh market opening moves this year, and that it would lower auto import tariffs in an “orderly way”.

Chinese officials have promised since at least 2013 to ease restrictions on foreign joint ventures in the auto industry, which would allow foreign firms to take a majority stake. They currently are limited to a 50 percent stake in joint ventures and cannot establish their own wholly owned factories.

Tesla’s Chief Executive Elon Musk has railed against an unequal playing field in China and wants to retain full ownership over a manufacturing facility the company is in talks to build there.

Foreign business groups welcomed Xi’s commitment to reforms, including promises to strengthen legal deterrence on intellectual property violators, but said the speech fell short on specifics.

“China is opening sectors where they already have a distinct advantage, or a stranglehold over the sector,” Short said, citing its banking industry, which is dominated by domestic players.

Xi’s renewed pledges to open up the auto sector come after Trump on Monday criticized China on Twitter for maintaining 25 percent auto import tariffs compared to the United States’ 2.5 percent duties, calling such a relationship with China not free trade but “stupid trade.”

Analysts have cautioned that any Chinese concessions on autos, while welcome, would be a relatively easy win for China to offer the United States, as plans for opening that sector had been under way well before Trump took office.

But Vice Commerce Minister Qian Keming said at the forum on Tuesday that China’s economic reforms were driven by domestic factors and not due to external pressures.

Xi said China would accelerate opening up its insurance industry, with Shanghai Securities News citing a government researcher after the speech saying foreign investors should be able to hold a controlling stake or even full ownership of an insurance company in the future.

Trump’s move last week to threaten China with tariffs on $50 billion in Chinese goods was aimed at forcing Beijing to address what Washington says is deeply entrenched theft of U.S. intellectual property and forced technology transfers from U.S. companies.

Chinese officials deny such charges, and responded within hours of Trump’s announcement of tariffs with their own proposed commensurate duties.

The move prompted Trump last week to threaten tariffs on an additional $100 billion in Chinese goods, which have yet to be identified. None of the announced duties have been implemented yet, offering room for negotiation.

Beijing charges that Washington is the aggressor and spurring global protectionism, although China’s trading partners have complained for years that it abuses World Trade Organization rules and practices unfair industrial policies that lock foreign companies out of crucial sectors with the intent of creating domestic champions.

While U.S. officials, including Trump, have recently expressed optimism that the two sides would hammer out a trade deal, Chinese officials in recent days have said negotiations would be impossible under “current circumstances”.

Dallas Federal Reserve Bank President Robert Kaplan, on a visit to Beijing, said he was optimistic that very few if any of the proposed tariffs by the United States and China announced in recent weeks will actually be implemented.

“I think it’s so clearly in the interest of both countries that we have a constructive trading relationship and that we have substantive talks to redress these issues."

European shares dip on new Trump tariff threat

European Stock Markets

European shares fell slightly on Friday after U.S. President Donald Trump warned of further tariffs on China, although losses were limited by gains among defensive stocks like utilities. 

The pan European STOXX 600 fell 0.45 percent by 0707 GMT, erasing only part of the 2.4 percent gain in the previous session and remained on track for a small weekly gain.

Trump on Thursday directed U.S. trade officials to identify tariffs on $100 billion more Chinese imports, upping the ante in an already high-stakes trade confrontation between the world’s two largest economies.

The new warning however did not appear to change the prevailing view among investors that a full blown trade war that could threaten global growth is unlikely.

“Markets will now watch both the rhetoric from Trump’s cabinet members and China’s response to assess whether risk of a trade war is materially higher,” said Credit Suisse in its investment daily. “We continue to see a trade war as unlikely”.

However caution dominated, prompting investors into stocks like utilities seen as more resilient to possible trade escalations. French utility Suez (SEVI.PA) led the sector higher, further boosted by a bullish broker note.

Elsewhere among top movers was Dufry (DUFN.S), up 3.5 percent after the Swiss retail company proposed a higher than expected dividend, while Telecom Italia (TLIT.MI) rose 2.2 percent after Italian state lender CDP said it would buy a stake of up to 5 percent in the telecoms company.

Tech stocks were a weak spot with chip makers like Infineon (IFXGn.DE) generally lower following losses overnight in shares in Samsung Electronics (005930.KS).

The South Korean tech giant tipped a surprise record first-quarter profit but market reaction was muted due to growing concerns that the semiconductor boom that has driven its earnings is about to end.

The trade-exposed auto sector was the leading sectoral loser.

China ready for proportionate response to U.S. tariffs: envoy

Asian Stock markets

China will take counter-measures of the “same proportion” and scale if the United States imposes further tariffs on Chinese goods, China’s ambassador to Washington said, amid growing fears of an impending trade war. 

Cui Tiankai made the comments ahead of what is expected to be the announcement this week of U.S. tariffs on $50 billion to $60 billion in Chinese imports following an investigation under Section 301 of the 1974 U.S. Trade Act.

The U.S. tariffs are expected to target products benefiting from Beijing’s “Made in China 2025” industrial development program, although it may be more than two months before the import curbs take effect, U.S. officials have said.

China on Sunday announced tariffs on $3 billion in imports of U.S. food and other goods in response to U.S. tariffs on imports of aluminum and steel, a skirmish that investors fear is a prelude to a broader trade war.

The Section 301 investigation initiated by U.S. President Donald Trump is focused on accusations of theft of intellectual property and forced technology transfer by China, charges Beijing denies.

US Stocks - Wall St. to open lower as China tariffs revive trade war fears

Global Stock Markets

Wall Street was set to start the second quarter on a downbeat note on Monday as China’s decision to raise import tariffs on U.S. products revived global trade war fears and technology stocks remained under pressure. 

Nasdaq futures NQc1 pointed to a 0.8 percent decline at the open as big names including Facebook (FB.O) and Amazon (AMZN.O) slipped in premarket trading.

China, late on Sunday, said it would increase tariffs by up to 25 percent on 128 U.S. products, escalating a spat between the world’s biggest economies. The move came in response to U.S. duties on imports of aluminum and steel.

U.S. President Donald Trump is separately preparing to impose tariffs of more than $50 billion targeting “largely high-technology” Chinese products.

At 8:33 a.m. ET, Dow e-minis 1YMc1 were down 138 points, or 0.57 percent, with 33,657 contracts changing hands.

S&P 500 e-minis ESc1 were down 11.75 points, or 0.44 percent, with 102,321 contracts traded.

Nasdaq 100 e-minis NQc1 were down 54.25 points, or 0.82 percent, on volume of 39,975 contracts.

Amazon fell 1.5 percent after Trump launched his second attack over the weekend, accusing the world’s biggest online retailer of getting unfairly cheap rates from the U.S. Postal Service and not paying enough tax.

Facebook fell 0.8 percent as the data scandal last month continued to weigh. On Monday, brokerage Pivotal Research slashed its price target, citing a faster-than-expected deceleration in the social media company’s revenue growth.

Hit by concerns about a possible trade war, rising interest rates and valuations in the technology sector, the S&P 500 .SPX and the Dow Jones Industrial Average .DJI posted their worst declines in more than two years in the quarter ended March.

Nervous investors are hoping an unusually strong U.S. earnings season can restore some of the optimism that characterized equity markets last year.

Tesla (TSLA.O) shares fell about 4 percent after the electric car maker said the Model X vehicle that recently crashed was on Autopilot and also announced a recall.

Humana (HUM.N) rose about 6 percent after a report that Walmart (WMT.N) was in early-stage talks with the health insurer about developing closer ties, with acquisition discussed as one possibility. Walmart declined more than 1 percent.

Yen slips as easing trade fears revive risk appetite

Asian Stock Markets

The safe haven Japanese yen sagged on Tuesday as optimism that the United States and China could begin negotiations on trade helped ease concerns about a trade war, reviving demand for riskier assets.

Global markets were shaken last week after U.S. President Donald Trump moved to impose tariffs on Chinese goods and Beijing threatened similar measures, sparking fears of a trade war between the world’s two largest economies.

But reports of behind-the-scenes talks between the United States and China have eased concerns for now that global trade frictions could escalate out of control, with traders hoping any actual U.S. measures will be much more modest than first announced.

Chinese Premier Li Keqiang said on Monday it and the United States should maintain negotiations, reiterating pledges to ease access for American businesses.

The receding concerns over U.S.-China trade tensions whetted investor appetite for riskier assets. Wall Street scored its best day in 2-1/2 years and the Dow Jones Industrial Average saw its third-biggest point gain ever on Monday.

The yen, often viewed as a safe haven currency in times of market turbulence and economic uncertainty, partly because of the resilience provided by Japan’s current account surplus, retreated due to the revival in investor risk appetite.

With the yen on the defensive, the dollar rose 0.2 percent to 105.62 yen. The greenback has bounced back after hitting a 16-month low of 104.56 yen on Monday.

Market participants said the yen showed limited reaction to testimony in Japan’s parliament by a former finance ministry official, who said Japanese Prime Minister Shinzo Abe, his wife, Finance Minister Taro Aso and their top aides did not give instructions to change documents about a land deal at the heart of a suspected cronyism scandal.

The simmering controversy has slashed Abe’s support ratings and clouded his chances of a third three-year term as ruling Liberal Democratic Party (LDP) leader in a September party vote.

The political scandal has been seen as a factor that could spur yen-buying, as it has cast some doubt over the future of Abe’s reflationary economic policy agenda, including monetary stimulus.

The euro rose 0.2 percent against the yen to 131.53 yen, after surging 1.4 percent on Monday for its biggest one-day percentage gain since June 2017.

Against the dollar, the euro rose 0.1 percent to $1.2454, clinging near Monday’s high of $1.24615, which was the euro’s strongest level since mid-February.

The firmness of some of its major rivals as well as emerging market currencies helped weigh on the greenback.

The dollar’s index against a basket of six major peers held steady at 89.042, languishing near Monday’s five-week low of 88.979.

Emerging Asian currencies rose, with the Malaysian rinngit hitting a two-month high of 3.8700 per U.S. dollar.

Brent crude oil futures have risen 6.9 percent in March, supporting the currencies of commodities exporters.

China’s yuan extended its gains against the U.S. dollar to a seven-week high on Tuesday after the central bank set its official fixing at the strongest level in more than two-and-a-half years.[CNY/]

EU starts study into possible steel import limits

European Stock Markets

The European Union began a study on Monday on whether the import tariffs imposed by U.S. President Donald Trump warranted action to prevent predominantly Asian producers flooding Europe with steel. 

Trump’s tariffs, of 25 percent on steel and 10 percent on aluminum, came into force last Friday, although the European Union and six other countries secured temporary exemptions. 

The EU is concerned about whether steel manufacturers subject to the U.S. tariffs will divert their product to Europe, leading to a surge of imports. 

Its study, which may last up to nine months, could lead the EU to impose its own quotas or tariffs on steel, including stainless steel and pipes, to prevent harm to its own industry. 

The tariffs or quotas would have to apply to all countries, meaning leading exporters China, India, Russia, South Korea and Turkey would be hit. U.S. steel makes up less than 1 percent of EU steel imports. 

“The information currently available to the European Commission... has revealed that imports of certain steel products have recently increased sharply showing that there is sufficient evidence that these trends in imports appear to call for safeguards measures,” the European Commission said in a document published in the EU official journal on Monday. 

China’s commerce ministry said it was willing to strengthen coordination with the European Union to cope with chaos caused by the U.S metals tariffs, adding that protective measures would only make the situation worse. 

The Commission said total imports of steel had increased to 29.3 million tonnes in 2017 from 17.8 million tonnes in 2013, largely due to global overcapacity and measures taken by third countries to limit dumping. 

For some products, it said, the industry was in a fragile condition and vulnerable to further increases in imports, which was likely due to trade defense measures, including the recent imposition of tariffs by the United States. 

It has given interested parties 21 days to complete questionnaires or submit information to aid its inquiry. 

The European Union itself has until May 1 to secure a permanent exemption from U.S. metals tariffs.

Europe says it wants to avert a trade war but the Commission has proposed a series of measures if the White House hits EU producers, including a challenge at the World Trade Organization and import duties on U.S. products such as orange juice, bourbon and Harley-Davidson Inc (HOG.N) motor-bikes.

Asian shares hammered as trade war fears sap sentiment

Asian Stock Markets

Asian shares were hammered again on Monday as fears of a trade war between the United States and China took their toll, but the safe haven yen came off its highs and U.S. stock futures climbed as investors saw some light at the end of the tunnel. 

Global markets were shaken when U.S. President Donald Trump moved to slap tariffs on Chinese goods, on top of import duties on steel and aluminium, prompting a defiant response from Beijing. 

But E-Mini futures for the S&P 500 .ESc1 brushed off the gloom on Monday to leap 0.6 percent on reports the United States and China have quietly started negotiating to improve U.S. access to Chinese markets.

The United States also agreed to exempt South Korea from steel tariffs, imposing instead a quota on steel imports as the two countries renegotiate their trade deal.

The positive headlines were little consolation for Asian shares which were left nursing their wounds. 

Japan's Nikkei .N225 trimmed early losses but were still down 0.4 percent. Chinese shares declined about 1.7 percent. SSEC .CSI300

 

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slipped 0.4 percent for its fourth consecutive day in the red. 

The index is headed for its first quarterly decline since late 2016 as the risk of faster U.S. rate rises and a trade war spooked investors who had enjoyed a multi-year bull run.

South Korea's benchmark share index .KS11 rose 0.3 percent, one of only three markets in positive territory. "Protectionism remains a source of volatility and downside risk for equities," analysts at JPMorgan said in a note. 

“Asia ex-Japan equity outperformance is in part a function of faster growth and capital inflows - both clearly at risk in a trade war.” 

In the uncertain global economic climate, investors looked to pile into the Japanese yen JPY=, traditionally a safe haven asset thanks to the country's massive current account surplus. 

Speculators added short dollar bets to their portfolios, taking the net short position to its highest in more than a year, according to calculations by Reuters and the Commodity Futures Trading Commission for the week to March 20.Short yen positions were cut to the smallest since November 2016. 

By late Asian trade, the yen had eased slightly from near 16-month highs to 104.90 per dollar while the Australian and New Zealand dollars, a liquid proxy for China plays, staged a welcome rebound.

The Aussie AUD= was up 0.3 percent while the kiwi NZD= gained 0.6 percent. 

The dollar index .DXY tracking the greenback against six other major currencies was near a one-month low at 89.423. 

In commodities, international Brent crude futures LCOcv1 opened above $70 per barrel for the first time since January but the gains could not be sustained as the ongoing trade disputes weighed on global markets. [O/R] 

Spot gold XAU= was flat at $1,346.8199 an ounce.

Japanese yen raced to highest level in more than 16 months

Asian Stock Markets

The Japanese yen raced to its highest level in more than 16 months and the Swiss franc surged on Friday as the growing threat of a trade war prompted investors to take shelter in perceived low-yielding currencies. 

With short positions in the yen at near record highs, according to weekly positioning data, thanks to years of using the Japanese yen as a funding currency to buy high yielders, markets braced for some unwinding of those bets. 

The dollar fell to as low as 104.635 yen on Friday, the greenback's lowest level since November 2016. The dollar was last down 0.5 percent at 104.80 yen JPY=EBS. 

The broad rise in the yen came as financial markets were rattled by worries over rising U.S.-China trade tensions. 

U.S. President Donald Trump signed a presidential memorandum on Thursday that will target up to $60 billion of Chinese products with tariffs, but only after a 30-day consultation period that starts once a list of goods is published. 

The broad rise in the yen came as financial markets were rattled by worries over rising U.S.-China trade tensions. 

A gauge of stress in the U.S. money markets climbed to its highest level in nearly nine years on Tuesday on concerns about growing costs for banks and other companies to borrow dollars and further interest rate increases from the Federal Reserve. 

The gap between the three-month dollar London interbank offered rate USD3MFSR= and three-month overnight indexed swap rate USD3MOIS= expanded to 58 basis points, the widest since May 2009, according to Thomson Reuters data. 

In a week that the U.S. Federal Reserve broadly stuck to its “dot plot” on future interest rate moves and signaled a relatively upbeat outlook for the economy, 10-year U.S. Treasury yields are on track to post its second biggest drop so far this year, further weighing on the greenback. 

Against a basket of its rivals, the dollar .DXY was on track to fall 0.2 percent, taking its weekly losses to about 0.6 percent, its biggest drop in a month. 

The Swiss franc CHF= was also the other notable winner in currency markets this week with a 0.6 percent rise. 

In other currencies, sterling GBP=D3 was relatively stable in the backdrop of an EU summit with the British currency changing hands at $1.4107.

Asian Stocks Mixed, Yen Rises as Treasury Yields Decline

Asian Stock Markets

Asian stocks fluctuated and the yen gained as traders adopted a risk-off approach, digesting comments from President Donald Trump’s new economic adviser. Treasury yields extended declines after lackluster U.S. retail sales stoked concern that consumer spending is cooling, weighing on the dollar.

Stock benchmarks fell in Tokyo, and were little changed in Sydney, Seoul and Hong Kong. U.S. futures swung between gains and losses. Earlier, the S&P 500 fell for a third day, with volume more than 10 percent below the 30-day mean. Incoming White House economic adviser Larry Kudlow signaled Trump would support a strong dollar and take a tougher line on trade with China.

The yen gained for a second day. Treasury yields tested early-February lows on bets the Federal Reserve won’t accelerate the pace of interest-rate hikes.

The lackluster retail sales data provided the last major economic indicator prior to the Fed’s policy decision next week. While an increase in borrowing costs at the meeting is pretty much a done deal, it remains an open question as to whether U.S. policy makers lift their expectations for the pace of future increases.

Elsewhere, oil steadied near $61 a barrel as signs of stronger U.S. fuel consumption balanced OPEC forecasting for the first time that new supplies from its rivals will exceed demand growth this year. Bitcoin drifted toward $8,000.

Topix index fell 0.4 percent as of 12:14 p.m. Tokyo time.
Hong Kong’s Hang Seng Index was flat.
Kospi index was little changed.
Australia’s S&P/ASX 200 Index lost 0.2 percent.
Futures on the S&P 500 Index added 0.1 percent.
The MSCI Asia Pacific Index fell 0.2 percent.


The Japanese yen jumped 0.3 percent to 106.01 per dollar.
The euro rose 0.1 percent to $1.2379.

The yield on 10-year Treasuries fell one basis point to 2.81 percent.
Japan’s 10-year yield fell less than one basis point to 0.046 percent.
Australia’s 10-year yield fell two basis points to 2.72 percent.

Shares under pressure; Trade war concerns

Global Stock Markets

Shares were under pressure for a second day on Wednesday and the dollar held near one-week lows after a threat by U.S. President Donald Trump to slap $60 billion in tariffs on Chinese imports rekindled investors’ concerns about the economic growth outlook. 

Equities attempted to recover after Tuesday’s hefty losses, heartened by robust Chinese factory data, with S&P500 futures signalling a firmer opening for Wall Street ESc1.

But markets struggled to overcome fears of a trade war and U.S. political uncertainty after Trump abruptly sacked Secretary of State Rex Tillerson.

The Tillerson news, coming days after the exit of Gary Cohn, a strong free trade proponent, had sent the dollar skidding, pushed world stocks lower and bond prices higher.

The moves accelerated after news of the planned tariffs, which reportedly target Chinese tech, electronics and telecoms.

The negative momentum faded somewhat in Europe, with a pan-European equity index up 0.3 percent after it fell 1 percent on Tuesday .

The index was boosted by a 1 percent jump in resources stocks which benefited from the Chinese data .SXPP as well as a 3-billion-euro share buyback at German sportswear firm Adidas (ADSGn.DE). 

That left MSCI’s all-country equity index down only marginally .MIWD00000PUS, its second day in the red and off one-month highs hit before news broke of Tillerson’s sacking. 

His departure brings to 35 the number of senior Trump administration officials who have left, Citi estimates. 

The dollar has been another casualty, though it swung 0.15 percent higher after three days of losses. U.S. Treasury yields traded just off one-week lows touched earlier in the session .DXY US10YT=RR. 

German 10-year government bond yields DE10YT=RR approached one-month lows and stand 20 basis points below this year’s peak, at 0.60 percent. 

Central banks in Japan and the euro zone, meanwhile, also stuck with their dovish message.  

The euro slipped 0.2 percent against the dollar, inching off an overnight one-month high EUR= after European Central Bank President Mario Draghi said the ECB needed more evidence that inflation was rising towards target.

Asian shares faltered, as U.S. trade fears eclipse strong China data

Asian Stock Markets

Shares faltered and the dollar skidded on Wednesday as investors fretted over the threat of new U.S. tariffs on Chinese imports, brushing aside data that showed the Asian economy got off to a solid start in 2018. 

Investor appetite for risk was also hit by U.S. President Donald Trump’s move to fire his Secretary of State, regarded as a moderate in his administration, reinforcing market uncertainty about Trump’s future policies. 

In a sign the equity market sell-off would extend elsewhere, S&P E-Mini futures ESc1 were down 0.1 percent while FTSE futures FFIc1 slipped 0.3 percent. 

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS stumbled 0.7 percent, retreating from a 1-1/2 month high on Tuesday, with the technology sector the biggest drag. 

Japan's Nikkei .N225 dropped 0.8 percent. China's SSE Composite index .SSEC and the blue-chip CSI 300 .CSI300 fell 0.5 percent each.

The MSCI Asia ex-Japan IT index MIAX0IT00PUS declined 0.5 percent as Trump sought to impose tariffs on up to $60 billion against information technology, consumer electronics and telecoms.

Large Asian technology stocks such as LG Display (034220.KS), Tencent Holdings (0700.HK) and Taiwan Semiconductor (2330.TW) were all down by more than 1 percent.

Investors suspect policymakers who favour protectionism will also seek to use the currency as a trade weapon, if not overtly then through benign neglect.

As news from the United States dominated, the market shrugged off stronger-than-expected data from China which showed the country’s industrial output expanded at a surprisingly faster pace at the start of the year. Fixed asset investment also handily beat forecasts, while retail sales improved from December.

Still, investors were inconsolable and followed overnight losses on Wall Street with the Dow .DJI off 0.7 percent, the S&P 500 .SPX down 0.6 percent and the Nasdaq Composite .IXIC falling 1.0 percent.

The selling intensified after Trump dismissed Tillerson following a series of public rifts over policy on North Korea, Russia and Iran. He was replaced with loyalist CIA Director Mike Pompeo.

The move comes only days after the exit of White House economic advisor Gary Cohn who was a strong proponent of free trade.

Tillerson’s dismissal and the risk of new import duties on China coincided with subdued U.S. consumer price data on Tuesday with annual core inflation, at 1.8 percent, meeting expectations.

The in-line reading should have been positive for risky assets as it was the fear of a pick-up in inflation and in-turn faster U.S. rate hikes that had hit global shares in early February.

But the inflation data did little to move market expectations of Fed rate rises with an increase next week now fully priced-in.

All that put together meant dollar weakness across a basket of currencies .DXY. It eased a tad to 106.5 yen. JPY=

The yen did dip briefly after minutes of the Bank of Japan’s January meeting showed most policymakers shared the view that the central bank should “persistently” pursue powerful monetary easing.

The euro rose overnight to edge towards a recent one-month top of $1.2446 EUR=. It was last at $1.2405, while the pound GBP= was firmer at $1.3989.

In commodities, oil prices were mixed U.S. crude CLcv1 up 2 cents at $60.73. Brent LCOc1 fell 10 cents to $64.54.

Spot gold XAU= was a touch firmer at $1,327.82 an ounce.

FTSE treads with little change as Trump softens tariff stance

European Stock Markets

UK shares were little changed on Friday after U.S. President Donald Trump softened his stance on trade tariffs, easing worries over a trade war that had weighed on equity markets.

The country's blue chip FTSE  benchmark index was flat at 0938 GMT, moving in a narrow range and line with the broader European market, while mid-caps added 0.28 percent as investors digested a number of earnings updates. 

Trump announced import tariffs on steel and aluminium but said Canada and Mexico would be exempt and that other countries could apply for exemptions, although details of when they would be granted were thin. 

The FTSE, which is down around 6 percent so far this year, was little changed after data showed that UK industrial output in February rose 1.3 percent but missed expectations for a 1.5 percent rise. 

Later in the session, investors will keep an eye on the U.S. jobs report for more clues on the pace of interest rate hikes in the world’s largest economy. 

On Friday there was little specific company news to capture investors’ attention.

The biggest FTSE gainer was NMC Health (NMC.L), which briefly touched a record high, up as much as 5.7 percent following a well received trading update earlier this week. The stock was up 3.1 percent. 

The UAE healthcare provider reported a 38.2 percent rise in annual net profit on Wednesday and said acquisitions this year could top the $641 million it spent in 2017. 

Vodafone (VOD.L) was a weak spot, down 0.6 percent, after Bernstein analyst downgraded the stock to market perform. 

On the midcap index, Renewi (RWI.L) fell 6 percent after the waste-to-product company said it would take an impairment charge following the review of contracts in its UK municipal division. 

Inmarsat (ISA.L) fell 5 percent after a quarterly update which was in line with expectations. Morgan Stanley analysts said comments around its government business were cautious, indicating that consensus expectations for 2019 revenue growth of 5 percent were too high. 

GVC Holdings (GVC.L) rose 3.3 percent after the online gambling firm saw full-year net gaming revenue rise 17 percent in 2017, helped by gains from the bwin.party businesses it bought three years ago. GVC is set to take over Britain’s largest bookmaker Ladbrokes Coral (LCL.L).

Oil prices under pressure ahead of U.S. supply data

Global Stock Markets

Crude prices came under pressure, ahead of U.S. supply data that could show rising stockpiles, and as it followed perceived riskier assets lower after the resignation of the White House’s chief economic adviser, Gary Cohn.

April West Texas Intermediate crude CLJ8, -0.77%  dropped 53 cents, or 0.9%, to $62.07 a barrel. The contract has gained 2.6% over the past two sessions, scoring a third-straight climb on Wednesday. May Brent crude LCOK8, -0.84% the global oil benchmark, fell 62 cents, or 0.9%, to $65.17 a barrel.

The American Petroleum Institute late Tuesday reported U.S. crude supplies rose 5.7 million barrels for the week ended March 2, according to sources. It also showed a fall of 4.5 million barrels in gasoline stockpiles, while distillate inventories climbed 1.5 million barrels.

That data comes ahead of official supply data from the Energy Information Administration due Wednesday morning. Analysts polled by S&P Global Platts expect the EIA to report a rise of 2.5 million barrels for crude inventories, along with declines of 500,000 barrels for gasoline and 1.6 million barrels for distillate supplies.

Oil prices fell late Tuesday on the API data, with losses then compounded by news of Cohn’s resignation, which also triggered sharp losses for U.S. stock futures and weakness in the U.S. dollar. Oil has been broadly tracking moves in stock markets, which have been volatile since an early February selloff.

Cohn’s resignation came on the heels of U.S. President Donald Trump’s decision to impose steel and aluminum tariffs that had been opposed by the economic adviser. He was largely viewed as a steady hand in an administration that some critics have called tumultuous.

On Nymex, April gasoline RBJ8, -0.09% shed 0.2% to $1.929 a gallon, while April heating oil HOJ8, -0.61%  fell nearly 1% to $1.885 a gallon.

April natural gas NGJ18, +1.16%  was flat at $2.75 per million British thermal units.

Stock futures pointed to higher opening ; hopes on North Korea open to talks

Global Stock Markets

U.S. stock futures pointed to a sharply higher opening after South Korea said it would hold its first summit in more than a decade with North Korea and that the latter was open to talks with the United States on denuclearization.

Appetite for risk assets picked up across global markets on Tuesday as investors digested an apparent diplomatic breakthrough with North Korea and judged fears of a full-blown trade war overdone.

European stocks followed Asian peers higher, extending a rebound as U.S. President Donald Trump faced resistance in his plans for a series of import tariffs. In the latest development, the European Commission proposed some retaliatory measures on U.S. goods. The euro rallied.

Optimism was boosted as the South Korean president’s office said North Korea is open to denuclearization if the safety of Kim Jong Un’s regime is guaranteed. Treasuries, often bought as safe-haven assets, declined. U.S. equity futures extended gains, and the dollar weakened.

The rebound in stocks suggests fears of an escalation of protectionism may be easing, even as Europe mulls its potential response to U.S. duties. Trump is facing domestic resistance to his planned levies on steel and aluminum imports -- House Speaker Paul Ryan has called on him to reconsider, while White House economic adviser Gary Cohn is said to be arranging a meeting between Trump and U.S. executives in a bid to halt the order.

Elsewhere, Bank of Japan Governor Haruhiko Kuroda appeared to dial back some of his recent perceived hawkishness. The Australian dollar pared gains as the central bank left interest rates unchanged and gave no indication an increase is coming soon. And in Italy, stocks and bonds rose as the country began the potentially lengthy process of forming a new government.

Stocks
The Stoxx Europe 600 Index climbed 0.7 percent as of 7:06 a.m. New York time.
Futures on the S&P 500 Index rose 0.5 percent to the highest in a week.
The MSCI Asia Pacific Index surged 1.3 percent, the first advance in more than a week and theargest jump in nine months.
The U.K.’s FTSE 100 Index jumped 0.9 percent, the biggest increase in more than three weeks.
The MSCI Emerging Market Index climbed 1.7 percent.

Currencies


The euro gained 0.5 percent to $1.2393, the strongest in more than two weeks.
The British pound increased 0.4 percent to $1.3904 on the biggest climb in almost three weeks.
The Japanese yen fell 0.1 percent to 106.35 per dollar.
South Africa’s rand jumped 0.7 percent to 11.747 per dollar, the strongest in a week.
The MSCI Emerging Markets Currency Index jumped 0.5 percent on the largest climb in almost five weeks.

Bonds
The yield on 10-year Treasuries rose one basis point to 2.90 percent, the highest in more than a week.
Germany’s 10-year yield climbed five basis points to 0.69 percent on the largest surge in almost four weeks.
Britain’s 10-year yield climbed six basis points to 1.495 percent on the biggest surge in almost four weeks.

Commodities
West Texas Intermediate crude climbed 0.6 percent to $62.96 a barrel, the highest in a week.
Gold rose 0.5 percent to $1,327.23 an ounce, the highest in more than a week on the biggest advance in more than a week.

Asian shares regain; moderate trade war fears

Asian Stock Markets

Asian shares regained some ground on Tuesday after U.S. President Donald Trump faced growing pressure from political allies to pull back from proposed steel and aluminum tariffs, easing investor worries about an imminent trade war. 

Sentiment was also supported by receding risk aversion in Europe with the euro gaining support from the creation of a coalition government in Germany and the impact of Italy’s inconclusive election results limited to a mild sell-off in domestic bonds and stocks.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.3 percent while Japan’s Nikkei jumped 2.3 percent, a day after it hit a five-month low.

Korean shares have erased all the losses they had taken after Trump’s announcement even though the country is seen as being among the worst affected in region by the tariffs due to its big steel exports to the United States.

MSCI’s broadest gauge of the world’s stock markets rose 0.3 percent after having snapped a four-day losing streak on Monday with a gain of 0.7 percent.

Wall Street shares have now recouped all the losses incurred after Trump unveiled a plan to impose tariffs on steel and aluminum late on Thursday.

Leading Republicans, including House of Representatives Speaker Paul Ryan and Representative Kevin Brady, turned up the pressure on Trump to rethink the plan on Monday.

Some investors also saw the tariffs threats as a U.S. negotiating tactic to get a better deal on NAFTA.

Still, uncertainty remains with confusion about the timing and extent of the planned tariffs inside the 

The specter of a trade war was not the only source of concern for the stock market.

As the global economy steams ahead, investors have become increasingly concerned that U.S. inflation, which has been subdued since the 2008 financial crisis, could finally pick up.

While moderate inflation generally supports equity investors, rapid inflation, or fear of it, could prompt the Federal Reserve to hike rates faster, undermining the attraction of equities.

U.S. bond yields rose as Wall Street shares rallied. The 10-year U.S. Treasuries yield rose back to 2.882 percent from last week’s low of 2.793 percent. A break of last month’s peak of 2.957 percent could trigger fresh selling in Treasuries, traders say.

In the currency market, the euro traded at $1.2352, extending its recovery from a seven-week low of $1.21545 hit on Thursday.

The euro managed to recover losses made on Monday after two anti-establishment leaders made early plays to govern Italy following an inconclusive election where voters shunted mainstream parties to the sidelines.

The dollar fetched 106.41 yen, up 0.2 percent for the day, crawling back from its 16-month low of 105.24 touched on Friday on improved risk appetite. 

The Canadian dollar hit an eight-month low of C$1.3002 per U.S. dollar as U.S. President Donald Trump used proposed tariffs on steel and aluminum as a bargaining chip in talks to revamp NAFTA.

Australia & NZ dollars defensive as trade talk dominates

New Zealand Stock Markets

The Australian and New Zealand dollars stayed on the defensive on Monday as rumblings about a world trade war curbed risk appetites and overshadowed the upbeat part of domestic economic data.

The Aussie dollar was off 0.18 percent at $0.7748 and uncomfortably near to recent two-month lows at $0.7713.

The kiwi eased 0.35 percent to $0.7218 and closer to support around $0.7184.

Both countries have open commodity exporting economies that benefit substantially from free trade, making them vulnerable should U.S. President Donald Trump's threat of tariffs lead to a round of tit-for-tat reprisals.

 Lost in the noise was Australian data showing strength in vehicle sales, job ads and approvals to build new homes that augured well for continued economic growth this year.

 Figures due Wednesday are forecast to show Australia's A$1.8 trillion gross domestic product (GDP) expanded by around 0.6 percent in the December quarter.

That would see annual growth slow to 2.5 percent, from 2.8 percent, but it would still mark more than 26 years without a technical recession.

 The Reserve Bank of Australia (RBA) holds its March meeting on Tuesday and is thought certain to keep rates at 1.5 percent and signal it is no rush to hike anytime soon.

 For the kiwi, the next test will be a global auction for dairy, the country's main goods export, which could weigh if prices slip as analysts expect.

New Zealand government bonds eased, sending yields 4.5 basis points higher.

Australian government bond futures recouped early losses as risk aversion slugged stocks across Asia.

The three-year bond contract edged up half a tick to 97.935, while the 10-year contract was off 1 tick at 97.2700