World stocks rises up from two and a half month low, China soothes currency markets

Global Stock Markets

World stocks rose on Tuesday, supported by gains in Europe and three straight days of tech-driven rises in the United States, even though markets across Asia and especially China remained in the grip of trade turbulence. 

Wall Street was set for another firmer session as investors positioned for strong Silicon Valley earnings before the reporting season starts next week, while European shares also rose after a deal on settling a migration policy row that had threatened Germany’s coalition government.

But a July 6 deadline is looming for Washington to impose tariffs on $34 billion worth of Chinese goods that Beijing has vowed to match with tariffs on U.S. products. President Donald Trump also threatened on Monday to “do something” if the United States was not better treated by the World Trade Organisation.

The prospects of a full-blown trade war and relentless yuan weakening CNY= -- it has fallen 5 percent in the past two weeks to 10-month lows -- reportedly forced China into intervention via state-run banks.. The currency then reversed earlier losses to move back into positive territory for the day against the dollar.

Other Asian currencies weakened, especially those such as the Indonesian rupiah that are doubly exposed — to trade and oil prices approaching $80 a barrel LCOc1.

Wall Street was set for another firmer session as investors positioned for strong Silicon Valley earnings before the reporting season starts next week, while European shares also rose after a deal on settling a migration policy row that had threatened Germany’s coalition government.

But a July 6 deadline is looming for Washington to impose tariffs on $34 billion worth of Chinese goods that Beijing has vowed to match with tariffs on U.S. products. President Donald Trump also threatened on Monday to “do something” if the United States was not better treated by the World Trade Organisation.

On equity markets, Hong Kong dived as much as 3.3 percent at one point to nine-month lows .HSI, hit also by a U.S. move to block China Mobile (0941.HK) from offering services to the U.S. market. Shanghai's bourse hit a 2-year trough .SSEC though both indexes inched higher towards the close as the yuan recovered. Japan's Nikkei .N225 edged to a near three-month closing low.

The mood was more cheerful in Europe where a pan-European equity index rose half a percent , the euro firmed marginally and bond yields rose after German Chancellor Angela Merkel struck the deal with her Bavarian conservative coalition partners.

Equity futures for the U.S. S&P500 and Nasdaq ESc1 NQc1 indicated a firmer session after Wall Street ended higher on Tuesday for the third day in a row. Gains of around 1 percent in tech firms such as Microsoft and Apple offset concerns about trade and its impact on growth.

Tech shares have been relatively resilient to trade fears - the New York Stock Exchange’s index of 10 tech giants including China’s Alibaba has gained over 30 percent this year. They are seen delivering another set of robust quarterly earnings.

While U.S. growth and company earnings seem unassailable, tit-for-tat tariffs from China and Europe may ultimately prove detrimental for American businesses and jobs.

U.S. Treasury bond yields rose slightly amid the easier mood but concern about the trade row has pushed the gap between two- and 10-year yields to the narrowest since 2007 US2US10=RR

Wall Street Week Ahead: Supercharged telecom sector could become investor favorite

An overhauled telecommunications sector featuring most of the so-called FANG stocks could debut as Wall Street’s hottest bet when it kicks off in September, boosted by a rising wave of media and television acquisitions. 

Long viewed as stodgy stocks for dividend-oriented investors, the telecom services sector .SPLRCL will be renamed communications services and supercharged with the addition of Facebook (FB.O), Netflix (NFLX.O) and Google-owner Alphabet (GOOGL.O) - three of the four FANGs, along with Amazon - as well as other companies that have driven the stock market to record highs in recent years.

The changes are part of the largest-ever shakeup of the stock market’s broad business categories.
In total, 14 S&P 500 companies, including Netflix, will shift from the consumer discretionary sector into communications, joining AT&T, Verizon Communications (VZ.N) and CenturyLink (CTL.N) in the biggest shakeup of the Global Industry Classification Standard, or GICS, since it was created in 1999. Five S&P 500 companies will switch from technology to communications.

The new sector will also include Walt Disney (DIS.N), Comcast (CMCSA.O) and other entertainment and media companies scrambling to consolidate and fend off competition from newcomers Netflix and Alphabet, which produce content and sell it directly to consumers.

The floodgates for such deals were sprung open this month by a legal ruling giving AT&T (T.N) the go-ahead to buy Time Warner for $85 billion.
Amazon.com (AMZN.O), the fourth FANG stock, will stay in
consumer discretionary and represent nearly a third of that sector. 

Wall St. poised for lower open on trade war concerns

Wall Street was set to open lower on Monday, pressured by fears of an escalating trade dispute between the United States and China after Beijing responded to import tariffs imposed by President Donald Trump. 

In response to Trump’s $50 billion in tariffs on Chinese goods, Beijing retaliated immediately by slapping duties on American export products, including crude oil, and suspended all previous trade agreements with Trump’s administration.

Global financial markets have struggled since February in the face of signs that Washington and Beijing were headed toward a trade war after several rounds of negotiations failed to resolve U.S. complaints over Chinese industrial policy, market access and a $375 billion trade gap.

Shares of manufacturers Boeing (BA.N) and Caterpillar (CAT.N) were down around 1 percent and 1.2 percent respectively in premarket trading.

Oil prices, which were lower in early global trading, steadied ahead of an OPEC meeting where top suppliers Saudi Arabia and Russia are expected to agree to increase global crude supply.

At 8:18 a.m. ET, Dow e-minis 1YMc1 were down 220 points, or 0.88 percent, S&P 500 e-minis ESc1 were down 20.25 points, or 0.73 percent, and Nasdaq 100 e-minis NQc1 were down 60.5 points, or 0.83 percent.

JD.Com’s (JD.O) U.S.-listed shares were up nearly 8 percent in premarket after Alphabet’s (GOOGL.O) Google invested $550 million in the Chinese e-commerce powerhouse.

Biotechnology firm China Biologic (CBPO.O) was up nearly 20 percent in premarket after Chinese investment giant CITIC Capital Holdings offered to buy it in a deal valuing the company at $3.65 billion.

General Electric’s (GE.N) shares fell 0.30 percent in premarket after it said it will ax 1,200 jobs in Switzerland.

Wall Street ends high-volume session lower on trade jitters

Wall Street stocks ended lower on Friday, capping a day of heavy trading with investors mostly pulling back from initial concerns over an escalating trade dispute between the United States and China.

U.S. President Donald Trump unveiled an initial list of strategically important goods that would be subject to a 25 percent tariff effective July 6, a move China’s Commerce Ministry called “a threat to China’s economic interest and security.”

China issued its own list of U.S. imports subject to tariffs, targeting soybeans, aircraft, autos and chemicals.

Since early May, the two countries have held several rounds of talks but have yet to reach a deal, as the United States pressures China to narrow a $375 billion trade deficit.

Friday also marked “quadruple witching day,” the quarterly simultaneous expiration of U.S. options and futures contracts, which tends to boost trading volume as investors replace expiring positions.
Volume hit the highest point since Feb. 8, when the S&P 500 sank to its lowest level of the year so far.

Companies considered the most sensitive to trade war worries were among the day’s biggest drags. Shares of Boeing Inc (BA.N), the single-largest U.S. exporter to China, fell 1.3 percent, while tariff-sensitive construction equipment maker Caterpillar Inc (CAT.N) and chemical company DowDupont.
Inc (DWDP.N) were down 2.0 percent and 0.9 percent, respectively.

Rising exports push U.S. trade deficit to seven-month low

The U.S. trade deficit fell to a seven-month low in April as exports rose to a record high, lifted by an increase in shipments of industrial materials and soybeans.

Wednesday’s report from the Commerce Department was the latest sign of robust economic growth in the second quarter.

But a protectionist trade policy being pursued by President Donald Trump, which has seen the United States slapping tariffs on imports from a host of countries including China, Mexico and Canada, as well as those in the European Union, poses a threat to the otherwise rosy economic outlook.

The Commerce Department said the trade gap narrowed 2.1 percent to $46.2 billion, the smallest since September. Data for March was revised to show the trade deficit falling to $47.2 billion, instead of the previously reported $49.0 billion.

Economists polled by Reuters had forecast the trade deficit unchanged at $49 billion in April. When adjusted for inflation, the trade gap narrowed to $77.5 billion from $78.2 billion in March. The so-called real trade deficit is below its $82.5 billion average in the first quarter.

If the trend in the real trade deficit is maintained, trade could contribute to gross domestic product in the second quarter after having a neutral impact in the January-March period.

Prices for U.S. Treasuries were trading lower. The dollar fell against a basket of currencies while stocks on Wall Street rose.

Trump in March announced tariffs on steel and aluminum imports to protect domestic industries from what he says is unfair competition from foreign producers. Last week he extended the duties to steel and aluminum imports from Canada, Mexico and the European Union.

Global stocks fall for consecutive sixth day but euro in min-rebound

Global Stock Markets

Italy’s political crisis and renewed trade war fears sent world stocks lower for the sixth day in a row, though hopes that Italy could avoid a new election helped European markets stage a mini-bounce from one of their worst selloffs in years. 

Investors have in recent days scurried for assets such as U.S. and German bonds or the Japanese yen, spooked by the possibility that Italy, the third-biggest euro zone economy, could deliver a bigger boost to eurosceptic parties in a snap election that sources said could be held by end-July.

An election at this point would also be a de facto referendum on Italy’s euro membership, evoking memories of the 2011-2012 euro debt crisis and carrying huge implications for the single currency, whatever its outcome.

However, reports that the two anti-establishment parties were again renewing efforts to form a government rather than force the country back to the polls, helped Milan-listed equities snap a five-day losing streak .FTMIB.

Similarly, short-dated Italian bond yields IT2YT=RR - a sensitive gauge of political risk - fell almost half a percent from half-decade highs after suffering their worst day in nearly 26 years on Tuesday.

A pan-European equity index was flat on the day after falling almost 4 percent in the past five days.

Barclays investment strategist Hao Ran Wee said that while risks from Italy for world markets had certainly risen, there were significant hurdles for the country to sharply increase spending or exit the euro zone.

Japan’s biggest private life insurance firm, Nippon Life, which holds some 4.8 trillion yen ($44.21 billion) worth of euro zone bonds, also said it had no plans for now to buy or sell its Italian debt holdings.

Equity futures signalled a stronger open on Wall Street ESc1, after Tuesday's harsh session which saw all three U.S. indexes lose between 0.5-1.2 percent .DJI .SPX .IXIC, led by financial sector stocks.

Asian markets however remained under pressure, with an index of non-Japanese Asian stocks .MIAPJ00000PUS, hurt also by news that the United States was pressing ahead with tariffs and restrictions on investments by Chinese companies. Beijing meanwhile said it was ready to fight back if Washington ignited a trade war.

Japan's Nikkei .N225 sold off 1.5 percent to a six-week low while Shanghai shares .SSEC also dropped 1.4 percent. Trade-sensitive emerging equities fell 1.2 percent to 5-1/2-month lows.

Emerging markets are also suffering from the dollar's renewed surge since mid-April, with Indonesia raising interest rates for the second time in two weeks to support the rupiah currency IDR=.

The politics and fears of an economic hit across the euro zone has driven investors into U.S. Treasuries and German Bunds pushing yields 15-20 basis points lower They have also fuelled a sharp rise in the yen and Swiss franc, especially against the euro EURJPY=.

The euro attempted to bounce off 10-month lows against the dollar EUR=EBS rising 0.5 percent to $1.160, while against the Swiss franc and yen it firmed around 0.3 percent EURCHF=.

U.S. 10-year Treasury yields rose 6.5 basis points to 2.83 percent US10YT=RR while German yields rose around 5 basis points DE10YT=RR

Oil prices meanwhile struggled as expectations grew that Saudi Arabia and Russia would pump more oil to counter potential supply shortfalls from Venezuela and Iran, even as U.S. output has surged in recent years.

Brent futures traded around $75.50 per barrel LCOc1, well off recent 3-1/2-year highs above $80.

Tech sector gains keep world shares near one-week high

Global Stock Markets

Oil prices eased on Tuesday from 3-1/2-year highs they hit on worries the United States may be set to pull out of a key nuclear accord with Iran, but robust tech sector gains in Asia helped support world stocks near one-week highs

U.S. President Donald Trump will announce at 1800 GMT whether Washington will withdraw from a deal that eased economic sanctions on Iran in exchange for Tehran limiting its nuclear program. A decision to leave the accord could give another boost to this year’s 13 percent oil rally, by constraining Iranian crude exports.

Brent futures nevertheless eased one percent after hitting new highs above $75 a barrel and MSCI’s world equity index hovered around flat after two days of gains, having touched one-week highs in the previous session.

 Hudson noted that oil prices had bucked the recent rise in the dollar - usually the two are inversely correlated - suggesting investors remained optimistic about the world economy and hence future demand for crude.

 Wall Street was lifted on Monday by a strong rally in Apple shares to new record highs following forecast-beating results last week and billionaire Warren Buffett’s decision to increase his stake in the firm.

Nearly 80 percent of the S&P 500 companies which have reported first quarter earnings have topped profit estimates, according to Thomson Reuters.

MSCI’s global tech index closed Monday at six-week highs. That helped lift emerging Asian shares by 0.5 percent and Japanese equities by 0.2 percent.

Momentum fizzled in Europe, however, with a pan-European equity benchmark and European tech down 0.2 percent. Futures for S&P500, Dow Jones and Nasdaq also slipped about 0.2 percent, signaling Wall Street weakness.

Italian shares were the day’s worst performers, slipping 1.5 percent as chances grew of new elections following an inconclusive March 4 vote.
Italian 10-year bond yields rose almost nine basis points to end-March highs.
Italy’s fragile economic recovery was at risk, he added.

Countering this was good news from China, where April exports and imports beat forecasts. Trade tensions between China and the United States also seem to have abated slightly, with talks resuming next week.

Mainland Chinese shares rose 1.3 percent.

On currencies, the prospect of solid U.S. growth propelled the dollar to a new 2018 high
Expectations of further rises in U.S. interest rates are forcing investors to buy back dollars they sold earlier this year on worries about Trump’s protectionist policies.
 The euro fell 0.3 percent against the dollar to $1.1977, the lowest since end-December.
Dollar gains have rippled through forex markets in recent days, forcing investors to unwind some of this year’s best performing trades - emerging markets.

A sovereign emerging dollar debt index saw spreads over Treasuries at the widest since early-2017, while many currencies touched multi-month lows.

The Turkish lira has plumbed successive record lows, while Argentina was forced last week to raise interest rates to 40 percent to stem peso bleeding

Tech-heavy emerging stocks rose on the day but are down 2 percent this month

Looking at the Dollar

FM Wealth Management News Letter

The US dollar (UUP) has gained back nearly of the early 2018 losses and is now trading in positive territory for the year.

This upward trend has piled pressure on those who shorted the dollar, in fact every short position from mid-January is now in the red.

As we can see there are a lot of them. According to Bank Of America, short positioning is near a seven-year high. The dollar downtrend throughout 2017 was such a one-way affair it invited traders to keep selling, as further declines looked a sure thing. Those that were bearish on the Dollar would have felt confident and complacent right up until the end of April when the bearish consolidation pattern broke the wrong way.

This complacency soon turned to panic as dollar bears soon realized their shorts weren’t such a sure thing after all.  They were asking themselves what had changed and of course he natural thing is to look for reasons for the move.

What Changed
The break from the early 2018 range came right before the April 26th European Central Bank meeting. The ECB essentially did not say anything at all on policy, so you can’t say it was a major catalyst. You could try to make the point that the ECB is trying to buy time and monetary policy divergence is back in focus, but this is nothing new. US data has strengthened this year while Eurozone data has swung the other way and noticeably softened.

ING reported recently, that at last week’s ECB meeting, the head of the ECB, Mario Draghi, pointed to temporary factors like the weather and strikes to partly explain the weakness in recent economic data. He mentioned earlier that the largest trade war impact on the Eurozone economy could come through the confidence channel. First Quarter data suggests that some of the weaker confidence has translated to lower growth for now. Even though early survey data for the Second Quarter has stabilized, there is not much that indicates a bounce back.
Contrast this with the US Federal Reserves’ minutes from March.

“The economic outlook has strengthened in recent months. The Committee expects that, with further gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace in the medium term and labor market conditions will remain strong.”

Therefore if one central bank is trying to find explanations for weakness and the other is highlighting strength, policy divergence is understandable. Britain is also seeing a dip in inflation and what looked like a near-certain rate hike in May is now anything but certain.

The apparent re-calibration with yields is seen as another factor in recent dollar strength. It is quite amusing to us how the divergence with rate differentials had analysts scratching their heads for most of last year as the dollar fell despite rising rates, and just when they thought they’d found an explanation (twin deficits), rate differentials start to matter again and the dollar has started to rise alongside rates.

Is it that US rates hit a magic number where the dollar suddenly became more appealing?
That could be but we track it back to the raft of Federal Reserve speakers in the week of April 16th.

The hot topic that week was the flattening of the yield curve, which was reported by ING when San Francisco Fed President (from June NY Fed president) John Williams admitted that an inverted yield curve has in the past been a “powerful signal of recessions”, but he doesn’t “see the signs yet of an inverted yield curve”. He believes that there is more of an inflation threat than Bullard, which will mean longer dated bond yields will move higher, but that the curve will continue to flatten which is “totally normal” in his view.

Fed Governor Quarles agreed yesterday by saying that he was not viewing the current flattening of the yield curve as a particular signal towards pending recession. Just like Williams, he believes the longer end of the bond market is lagging behind and will respond.

Well, the longer end did respond, and pretty much right away with a sharp rally in the 10-year, which steepened the yield curve. Not by much, but enough to break its immediate downtrend.
This breakout just happened to be when the dollar rally accelerated and 10-year yields seemed to matter once more.

Unfortunately there is not much historical evidence if a flattening or steepening yield curve is better for the dollar as there are so many other considerations. But its fair to say the recent rally in the 10-year has had a positive effect.

So Where Do We Go From Here
In early February we warned of a reversal from around 88 and proposed the path below based on a repeating (but smaller) technical pattern.
What’s interesting is the reversal pattern unfolding now is very similar to the one proposed but much smaller than expected.

We are looking at structure, not scale. These comparisons are helpful as it maps a fairly clear path up to 94 and then back down if the pattern continues to repeat.

Your Takeaway
The rally in the US dollar has surprised many especially as it makes new yearly highs. The two main reasons behind the rally are central bank policy divergence and the Fed’s comments on the yield curve, which have been particularly influential. Based on previous Dollar reversal patterns, this rally should pause but continue generally higher to the 94 area before losing steam again.

Wall Street News

US stocks fell to their lowest in a week and the greenback jumped as investors assessed the Federal Reserve's signal that it's in no rush to raise rates even as inflation rises to its target.

Equities tumbled in the final hour of trading as concern mounted that the Fed may let inflation run hot as it gradually raises borrowing costs.

Potential US restrictions on Chinese telecom companies also reinforced investor concerns about worsening trade relations between the United States and China.

Apple was the standout performer, climbing after a solid quarterly report, a forecast for strong iPhone sales and its announcement that it intends to buy back $US100 billion ($125 billion) worth of shares in response to the tax holiday for repatriated profits approved by Congress.

This led to the strongest jump in Apple's share price since February last year. On the flipside, Snap shares plunged 21.9 per cent after the Snapchat owner fell short of Wall Street forecasts for revenue and regular users.

With the tech earnings passed behind us and the Fed decision not altering US monetary policy materially, investors who are following the docket will now shift their attention back towards trade wars as the March US trade figures are due out on Thursday.

US STOCKS-Wall St set to open higher despite rising U.S. yields

Global Stock Markets

 Wall Street was set for gains on Monday as optimism about the strong earnings season helped ease concerns on rising U.S. bond yields.

* Caterpillar up after Citi says stock can outperform
* Hasbro tumbles after profit misses expectations
* Futures up: Dow 0.19 pct, S&P 0.22 pct, Nasdaq 0.42 pct

The yield on 10-year U.S. Treasuries, the benchmark for global borrowing costs, hit 2.9980 percent, its highest since January 2014. The U.S. five-year inflation swap, a key market gauge of long-term U.S. inflation, hit its highest level in 3-1/2 years.

The last time 10-year Treasury yields neared 3 percent, in 2013, it rocked risk appetite and sent stocks sliding and was shortly before oil prices went on a mighty 75 percent tumble. More recently, the stock market sold off in February as inflation expectations sent treasury yields surging.

But analysts say that strong earnings could help investors overlook such concerns at least for the moment.

The prospect of rising inflation comes as U.S. companies are reporting results for what is turning out to be a much stronger-than-expected first quarter.

Profits at S&P 500 companies are expected to have risen 20 percent in the quarter, according to Thomson Reuters I/B/E/S, making it the strongest quarter in seven years.

At 8:44 a.m. ET, Dow e-minis were up 47 points, or 0.19 percent. S&P 500 e-minis were up 5.75 points, or 0.22 percent. Nasdaq 100 e-minis were up 27.75 points, or 0.42 percent.

This week, 181 S&P 500 companies are scheduled to report including some of the technology heavy-hitters like Facebook , Microsoft, Amazon and Intel. Alphabet reports after markets close on Monday.

Shares of Hasbro fell 5.9 percent in premarket trading after the toymaker reported a bigger-than-expected drop in quarterly revenue, blaming the liquidation of Toys ‘R’ Us.

Caterpillar rose 1.4 percent Citigroup upgraded to “buy”, saying the stock could outperform over the next six to 12 months.

In a move that could ease tensions between the United States and China, U.S. Treasury Secretary Steven Mnuchin said on Saturday he may travel to China to try to resolve the differences over trade.

ASX set to start the week lower

The Australian share market is expected to open lower, after metals prices, and US and European stocks suffered falls in trading at the end of last week.

Wall Street: Wall Street's three major benchmarks slumped into the weekend even with mostly very solid corporate earnings so far this season, tracking at a 20 per cent year-over-year increase. 

ASX: The ASX is set to follow Wall Street lower. Futures are pointing to a 15-point drop at the open.It is a shortened trading week this week due to the Anzac Day public holiday.

Royal commission: The Hayne royal commission continues on today with AMP back in the spotlight. The company's share price was savaged last week, dropping around 20 per cent while open Friday, chief executive Craig Meller announced his resignation with immediate effect.

CPI: The surge in commodity prices has renewed the debate about the outlook for inflation and Australia's all-important consumer price index report for the first quarter, set to be released on Tuesday, is the key data point this week.

Commodities: Also likely to dent sentiment as the week begins is a retracing of recent advances in aluminium, copper, nickel and iron ore.

US: Reporting this week are Facebook, Alphabet, Amazon, Microsoft as well as Twitter. Apple, which saw its shares drop last week on concerns that global smartphone sales have perhaps peaked – according to the International Monetary Fund, reports on May 1. The iPhone maker's shares tumbled 7 per cent over the final three days of last week.

Wall Street slides as investors get jittery

Wall Street's three major indexes have declined as investors worried about a jump in US bond yields, with technology stocks leading the decline on nerves about upcoming earnings reports and iPhone demand.

The technology index was the biggest drag on the S&P 500 on Friday with a 1.5 per cent drop after registering three straight days of losses ahead of a key earnings week for the sector.

The Dow Jones Industrial Average fell 202.09 points, or 0.82 per cent, to 24,462.8, the S&P 500 lost 22.98 points, or 0.85 per cent, to 2,670.15 and the Nasdaq Composite dropped 91.93 points, or 1.27 per cent, to 7,146.13.

Despite Friday's decline the S&P eked out a gain of 0.5 per cent for the week to show its second weekly gain in a row.

Equity investors were jittery as the 10-year Treasury yield reached its highest level since January 2014 as a bond sell-off continued for a second day, driving the yield curve steeper after two weeks of flattening.

Benchmark 10-year notes last fell 12/32 in price to yield 2.9583 per cent, from 2.914 per cent on Thursday.

Wall Street's $8.1 trillion man joins the billionaire's club

It's not hard to imagine. There's Larry Fink, Starbucks coffee in hand, heading down Park Avenue. And there's Stephen Schwarzman, his old boss, heading up.

It's not hard because Fink and Schwarzman - two of the most successful financial whizzes of our time - have been on a collision course for years. They work, literally and figuratively, on the opposite sides of the same street, personifying a contest that's remaking money management.

On one side is Fink, power player in low-cost passive investments. On the other is Schwarzman, old-school dealmaker and champion of high-touch, high-fee alternative investments like private equity.

The broad outlines of their twin careers are by now well-known. First came the years together at Schwarzman's Blackstone Group LP, where the young Fink added a bond shop to the striving buyout operation. Then, the inevitable split. Fink got what was then the underdog: BlackRock Inc.

It's no underdog now. Lately, the investment world has been tilting BlackRock's way. Today the firm sits atop $US6.3 trillion ($8.1 trillion) in assets, making it the world's largest money manager and one that dominates the market in passive-investments.

That Fink has managed to pass the billion-dollar mark is, in fact, a testament to BlackRock's success. Since its 1999 listing, its share price has returned more than 3,600 per cent. Blackstone's shares have barely budged since its 2007 initial public offering.

Market watch

SPI futures down 6 points or 0.1% to 5810

AUD flat at 77.66 US cents

On Wall St: Dow -0.5%, S&P 500 -0.3%, Nasdaq -0.5%

In New York, BHP +1.3% Rio +0.8%

In Europe: Stoxx 50 +0.1%, FTSE +0.1%, CAC +0.1%, DAX +0.2%

Spot gold +0.8% to $US1346.20 an ounce

Brent crude +0.8% to $US72.58 a barrel

US oil +0.5% to $US67.39 a barrel

Iron ore +0.8% to $US64.96 a tonne

Dalian iron ore flat at 450 yuan

LME aluminium -1.7% to $US2285 a tonne

Aluminium touched six-year high on Friday

LME copper +0.1% to $US6830 a tonne

10-year bond yield: US 2.83%, Germany 0.51%, Australia 2.73%

US STOCKS-Wall St set to extend recovery as trade war fears cool

Global Stock Markets

 U.S. stocks on Thursday looked set to add to late-session gains from a day earlier as concerns over a trade war between the United States and China eased on signs that the world’s two biggest economies were open to negotiations on tariffs. 

Technology stocks, which have taken a beating in the past three weeks, were higher in premarket trading. Facebook, Amazon, Alphabet, Netflix - collectively known as the “FANG” group - were up between 1.1 percent and 3.8 percent.

The Dow Jones Industrial Average dropped about 500 points on Wednesday after a proposed U.S. tariffs on $50 billion of Chinese goods prompted swift retaliation from Beijing. China hit back with equal measure on U.S. goods such as soybeans, autos, chemicals and some types of aircraft.

Shares of big U.S. manufacturers, grain traders and chipmakers were hit hard until mid-day.

But sentiment reversed after President Donald Trump’s top economic adviser Larry Kudlow said the administration was involved in a “negotiation” with China rather than a trade war.

Also, the effective date of China’s move depended on when the U.S. action took effect, providing room for maneuver.

Economic data on Thursday showed that the U.S. trade deficit increased to a near 9-1/2-year high in February, but the shortfall with China narrowed sharply.

While exports to China were unchanged in February, imports from the country declined 14.7 percent.
At 8:35 a.m. ET, Dow e-minis were up 79 points, or 0.33 percent, with 65,148 contracts changing hands.

S&P 500 e-minis were up 12.75 points, or 0.48 percent, with 224,988 contracts traded.

Nasdaq 100 e-minis were up 50.5 points, or 0.77 percent, on volume of 80,483 contracts.

Facebook shares were up 3.7 percent after Chief Executive Mark Zuckerberg said the company had not seen “any meaningful impact” on usage or ad sales since the scandal.

Wells Fargo rose 1 percent and Citigroup gained 1.5 percent following upgrades by UBS.

Advanced Micro Devices jumped 2.8 percent after Stifel upgraded to “buy”, while Micron Technology fell 1.5 percent after UBS started with a “sell” rating. (Reporting by Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila)

The ASX fell back, Oil producers at it's best

Australian shares fell for the second time in three sessions as another surge in global trade tensions sent investors shying away from equities and as A2 shares fell hard.

The S&P/ASX 200 index fell 42 points, or 0.7 per cent, to 5789 while the All Ordinaries lost 44 points, or 0.7 per cent, to 5899 and the Australian dollar traded at US76.92c.

The losses in Australia came after another steep trade-related drop on Wall Street where speculation that the Trump administration is considering a crackdown on Chinese investments in technologies sent a technology sector already battered by revelations around data practices reeling.

Still, concern over a trade war was enough to batter stock prices in the Australian equity market, with the growth-sensitive resource sector under pressure as the banks also sold off.

Iron ore producer Fortescue Metals fell 4.6 per cent to $4.37, diversified miner BHP lost 1.1 per cent to $28.67, while Rio Tinto fell 1 per cent to $73.39.

Banks under pressure included CBA, down 0.8 per cent at $71.86, ANZ, down 1.1 per cent at $27.10, NAB, down 0.8 per cent at $28.40 and Westpac, down 0.4 per cent at $28.58. Macquarie shares fell 1.2 per cent to $102.81.

A2 Milk plunged 7.5 per cent to $12.06 after it said it's expecting marketing investment in the second half of 2018 to exceed investment made in the first half of 2018 by between NZ$35 million ($33 million) and NZ$40 million due to increased spending in China and the USA.

A2 investors were also eyeing a report in the New Zealand Herald that Nestle has launched a rival infant formula product in China under the brand name Atwo. A2 shares have performed strongly this year, up 63.5 per cent.

Australian asset manager Blue Sky Alternative Investments fell 9 per cent to $10.40 before trading was halted in its shares.

New Zealand: NZ Dollar rises from three-week low ahead of Fed meeting, ignores Wall St selloff

New Zealand Stock Markets

The New Zealand dollar bounced from a three-week low ahead of this week's Federal Reserve policy review, which is expected to lift US interest rates, while stocks on Wall Street after growings fears of regulation in the tech sector weighed on Wall Street. 

The kiwi rose to 72.53 US cents as at 8am in Wellington from as low as 71.94 cents overnight and from 72.10 cents yesterday. The trade-weighted index advanced to 74.61 from 74.27.

The Federal Open Market Committee kicks off its two-day policy meeting in chair Jerome Powell's first review at the central bank's helm and is expected to raise the federal funds rate a quarter point to a band of 1.5 percent-to-1.75 percent.

US Treasury yields have been climbing in anticipation of higher rates, which has supported demand for the greenback. Bond and currency traders largely ignored the sell-off on Wall Street, where the Nasdaq Composite Index dropped 2.7 percent on growing calls for an inquiry into Facebook data breaches, ahead of the Fed meeting.

That may catch up later in the week with the Chicago Board Options Exchange's Volatility Index, or VIX, climbing 28 percent to 20.24.

The kiwi fell as low as 51.21 British pence and was trading at 51.67 pence as at 8am in Wellington from 51.76 pence yesterday after the UK and European Union agreed terms for the Brexit transition which is expected to be approved at the EU summit this week. The kiwi traded at 58.71 euro cents from 58.75 cents yesterday.

Local data today include the Westpac-McDermott Miller consumer confidence survey, while across the Tasman figures on Australian house prices and minutes to the last Reserve Bank of Australia policy review are due for release.
The kiwi rose to 93.98 Australian cents from 93.61 cents yesterday and gained to 4.5918 Chinese yuan from 4.5649 yuan.

The local currency rose to 76.85 yen from 76.27 yen yesterday.

Asian shares mixed: yen firm

Asian Stock Markets

Asian share markets traded mixed on Monday as caution gripped investors in a week in which the Federal Reserve is likely to hike U.S. interest rates and perhaps signal that as many as three more lie in store for the rest of the year.

Japan's Nikkei .N225 extended early losses to drop 0.9 percent as exporters were undermined by recent broad-based strength in the yen.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS eased 0.35 percent, but China .CSI300 managed to eke out some gains.

The guarded mood was not confined to Asia, with the June contract for E-Minis futures on the S&P 500 ESc1 down 0.3 percent and FTSE futures FFIc1 off 0.2 percent.

While Wall Street had bounced on Friday, the major indices still ended lower for the week. The Dow .DJI lost 1.57 percent, the S&P .SPX 1.04 percent and the Nasdaq .IXIC 1.27 percent.

The decline was somewhat surprising given figures from Bank of America Merrill Lynch showed a record $43.3 billion of inflows into equities last week, outpacing bond flows for the first time since 2013.

For the year so far, $9.8 billion has gone into tech stocks and $7.3 billion into financials, while $41 billion has flowed into emerging markets and $31 billion into Japan.

Whether the cash continues to flow could depend on what the Fed decides on Wednesday. All 104 analysts polled by Reuters expected the Fed would raise rates to between 1.5 percent and 1.75 percent on Wednesday.

They were less certain on whether the “dot plot” forecasts of committee members will stay at three hikes this year or shift higher.

It will also be the first press conference for new Fed Chair Jerome Powell.

Analysts at JPMorgan, however, see a risk the Fed might not only add one more rate rise for this year but for 2019 as well. 

Any nod to four hikes would normally be considered as bullish for the U.S. dollar, yet the currency has shown scant correlation to interest rates in recent months, falling even as policy tightened.

Reasons cited by dealers include concerns about the U.S. budget and current account deficits, political chaos at the White House, better growth in competing countries, particularly Europe, and the risk of a U.S.-led trade war.

Trade will be top of the agenda at a two-day G20 meeting starting later on Monday in Buenos Aires and any signs of escalating stress between the U.S. and China could make investors in Asia nervous.

The cautious mood was evident in demand for the safe-haven Japanese yen which was climbing against a raft of currencies, including the euro and Australian dollar.

On Monday, the U.S. dollar was off 0.3 percent at 105.69 yen JPY= and not far from its recent trough at 105.24.

The dollar was a fraction firmer against a basket of currencies at 90.303 .DXY, while the euro eased 0.2 percent to $1.2264 EUR=.

The prospect of higher U.S. interest rates was been a burden for non-yielding gold, which slipped 0.8 percent last week. Early Monday, the metal XAU= was down at $1,311.20 per ounce.

Markets wave off global risks; Simmering fears of a global trade war.

Global Stock Markets

An embarrassing political scandal in Japan. Rapid job-turnover inside the White House and the threat of faster interest rate hikes in the United States. 

In any other era, this concoction would be a perfect recipe for heightened market volatility. But in recent months, markets have brushed aside risks and recurring bad news on geopolitics to stay focussed on positive macro-economic cues. 

And Guy Debelle, the Australian central banker who oversaw a review of global foreign exchange standards, says it doesn’t make sense. 

Investors got a taste of what the spike in volatility might look like when in early February fears of faster U.S. rate hikes hammered world shares.

That sell-off was short-lived, though, and equity prices are now not too far from their February highs.

A gauge of market volatility .VIX is near all-time lows, while most estimates of the term premium for 10-year Treasuries US10YT=RR are around zero, or even negative, despite projections of multiple rate rises by the U.S. Federal Reserve this year and next.

This comes at a time the world is seeing the first synchronised global growth since 2007, with strong corporate earnings and blistering job-creation.

Higher rates could all but dampen the optimism, and that is just one of the many risks.

The danger of a global trade war looms after U.S. President Donald Trump slapped duties on imported steel and aluminium and has threatened further tariffs on Chinese goods. 

In Japan, a cronyism scandal has engulfed Prime Minister Shinzo Abe and Finance Minister Taro Aso, causing uncertainty around political stability. 

Yet the market response so far: stay calm and look away. 

Despite shock events like Britain’s vote to leave Europe, the threat of a euro-zone break up and the potential for a nuclear war with North Korea, market volatility spiked only temporarily. 

In fact, equity returns last year were among the highest since the 2008 global financial crisis. 

Emerging markets did well too, and the Australian dollar AUD=D4, considered a barometer for global risk, jumped 8.7 percent in 2017, its best performance in seven years. 

For Shane Oliver, Sydney-based head of investment strategy at AMP Capital, risks can create chances to buy.

Wall Street set to recover after bumpy ride

Global Stock Markets

U.S. stock index futures signaled a rebound for Wall Street on Wednesday, a day after the main indexes fell more than half a percent on fears of political and trade uncertainties. 

By 6:53 a.m. ET, Dow e-minis 1YMc1 were up 84 points. S&P 500 e-minis ESc1 rose 7.5 points and Nasdaq 100 e-minis NQc1 gained 30 points.

Singapore-based Broadcom Ltd (AVGO.O) withdrew its $117 billion bid to acquire Qualcomm Inc (QCOM.O), two days after U.S. President Donald Trump blocked the deal citing national security concerns.

Qualcomm shares were up 0.9 percent and Broadcom rose 0.22 percent in premarket trading.

Ford shares (F.N) were up nearly 4 percent after Morgan Stanley double-upgraded the stock to “overweight” and raised its earnings forecast for the first time in two years.

The S&P 500 and the Dow closed 0.6 percent lower on Tuesday after Trump fired Secretary of State Rex Tillerson and appointed CIA Director Mike Pompeo as replacement.

Market sentiment took a hit early last week after the President announced plan to levy tariffs on steel and aluminum import.

The declines worsened on Tuesday on reports that Trump was seeking to impose tariffs on up to $60 billion of Chinese imports and will target the technology, telecoms and apparel sectors.

Investors are waiting for more data to assess the health of the world’s largest economy. At 8:30 a.m. ET, the Commerce Department is likely to say February retail sales rose 0.3 percent after unexpectedly falling 0.3 percent in January.

On Tuesday, data pointed to a steady annual U.S. core inflation at 1.8 percent, cementing investors expectations that the Fed would not raise rates more than three times in 2018.

Data on producer prices is also due on Wednesday and is likely to show final demand rose 0.1 percent in February, compared with a 0.4 percent increase in January.