Stocks increase in US sales hopes, but oil inspection verifies enthusiasm



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TOKYO (Reuters) – Asian stock exchanges and US stock futures posted modest gains on Monday with solid US sales hopes, although risk appetite has been softened by falling oil prices.

FILE PHOTO: Tokyo Stock Exchange (TSE) employees work on the stock exchange in Tokyo, Japan, October 11, 2018. REUTERS / Issei Kato

Investors were also wary before US and Chinese leaders met for crucial talks at the end of the week as trade tensions among the economic superpowers showed no sign of loosening.

"The US-China summit is the biggest event for the rest of the year," said Nobuhiko Kuramochi, chief strategist at Mizuho Securities.

European shares are seen higher, with the FTSE spread of Britain, France's FTSE, CAC .FCHI, and German DAX .GDAXI, between 0.4 and 0.5 percent.

The MSCI's broadest index for Asia Pacific stocks outside Japan. MIAPJ0000PUS rose 0.6 percent, led by gains in Hong Kong and Taiwan, while Japan's Nikkei. The N225 advanced 0.8 percent.

In China, the Shanghai Composite Index, the .SSEC, decreased by 0.3%.

US stock futures ESc1 saw a 0.6% rise in Asian trade, in the hope that US consumers would quickly spend so-called Black Friday and Cyber ​​Monday sales.

US buyers bought huge discounts on toys, clothing and electronics, both online and at Black Friday stores, giving retailers a strong start to the holiday season.

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

The OS & P 500 fell 0.66 percent to end around 10.2 percent below the record high of September 20, the second time this year went into a 10 percent correction after a defeat in early February .

Oil prices slipped a bit after falling 8% on Friday on their biggest weekly losses in almost three years as signs of slowing demand and rising US output have heightened fears of oversupply.

So far this month, WTI and Brent futures have fallen more than 20%, and unless they recover further this week, losses would mark their biggest decline since October 2008.

US CLc1 crude futures reached $ 51.12 a barrel, up 1.4% on the day and a low of $ 50.15 a barrel on Friday.

Brent LCOc1 futures were at $ 59.39 a barrel, up 2.3% in Asia.

"COLD WAR"

US President Donald Trump and his Chinese counterpart Xi Jinping are expected to hold talks in parallel to the G-20 summit in Argentina later this month.

FILE PHOTO: The German DAX stock index chart is portrayed on the stock exchange in Frankfurt, Germany, on November 22, 2018. REUTERS / Staff

Except for any agreement there, US $ 200 billion product tariffs, introduced at the end of September, are likely to be increased to a 10% proposal next year of 10%.

"Corporate profits from July to September were hardly affected by the latest fares. In the next gains, we will see the impact. And if fares are raised further next year, profits will be more affected, "said Mizuho's Kuramochi.

Some market participants say investor concerns go far beyond trade issues, noting that the decline in global stocks and oil prices began shortly after US Vice President Mike Pence stepped up pressure on China in a speech on October 4.

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

In that speech, Pence singled out disputes with China over broad issues of cyberattacks, Taiwan, freedom of the seas to human rights, accusing Chinese security agencies of plotting "large-scale theft of American technology," including military projects.

"Pence's speech is a beginning of the cold war," a foreign exchange trader at a US bank said, meaning that global supply chains would be put at risk. "And we have a slowdown in iPhones sales and all that. Bassing factors are piling up, "he said.

The global economy is already showing cracks with companies, cautious about investing, amid the rising winds to grow.

A survey on Friday showed that business growth in the euro zone has been much weaker than expected this month as the slowdown of the global economic momentum and a US-led trade war have led to a sharp decline in exports.

The IHS Markit Composite Flash Purchasing Manager Index for the euro area EUPMCF = ECI fell to 52.4 in November, the lowest since the end of 2014.

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

Germany's 10-year bond yield also fell to 0.3131 percent DE10YT = TWEB its lowest since early September.

The pound sterling barely traded at $ 1.2818 after European Union leaders sealed an agreement with Brexit on Sunday.

Markets are now trying to determine whether the deal could go through a British parliament that must vote before the next EU summit on 13 and 14 December.

The yen fell about 0.2 percent at 113.23 to the JPY dollar = on an increase in stocks.

The dollar index against a basket of six major currencies was virtually stable at 96,888, not far from this year's high of 97,704, set two weeks ago.

But it may lose steam if policymakers in the Federal Reserve take a more cautious approach to tightening future policy amid concerns about the economic slowdown next year.

President Jerome Powell will speak on Wednesday, while the speech by Vice President Richard Clarida is due on Tuesday. [FED/DIARY]

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

"There are already some dovish comments from the Fed recently. While this supports risky assets, it can lead to a correction in the dollar that has become very strong. "

Editing by Shri Navaratnam

Our Standards:The Thomson Reuters Trust Principles.

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