U.S. Stock Futures Drop as Trade-Talk Doubts Swirl: Markets Wrap

September 9, 2019

U.S. equity futures fell as Chinese and American officials struggled to schedule a planned meeting this month to continue trade talks. The pound slumped with the U.K. facing a showdown in Parliament over delaying Brexit again.

Contracts on the three main U.S. indexes extended their declines after Bloomberg reported the difficulties the two countries were having in arranging the talks, following Washington’s rejection of Beijing’s request to delay tariffs that took effect over the weekend. Stocks in Shanghai rose earlier as authorities vowed to support liquidity and growth. Elsewhere in Asia, equities in Japan, Hong Kong and Australia declined in thin volumes. The Stoxx Europe 600 advanced for a third straight session, led by financial services shares.

Cash markets for both U.S. stocks and bonds are closed for the Labor Day holiday. Treasury 10-year futures erased a decline while a gauge of the dollar increased for the sixth consecutive day. In the U.K., the pound headed for its biggest one-day drop in three weeks and gilts rose as Parliament looked set to seek a vote that would delay Brexit by three months unless there’s a new accord with the European Union by mid-October. Prime Minister Boris Johnson today responded that he would not delay under any circumstances. Johnson will tell rebels that if they defy him tomorrow he will on Wednesday ask parliament to call a general election for Oct. 14, according to a senior government official.

Focus on low-risk investment strategies, says John Stopford, head of multi-asset income at Investec Asset Management.

Source: Bloomberg

“The risks of an early election and the increasing political uncertainty, I think, is really weighing on investors minds” in the U.K., Jeremy Stretch, Canadian Imperial Bank of Commerce head of G-10 FX Strategy, said on Bloomberg TV.

Investors are still reeling from a volatile August that saw a collapse in Treasury yields and declines for equities globally. Crude oil continued slipping after completing its first monthly drop since May amid fears that the fading global economic growth will hurt fuel demand. In China, a drop in the official purchasing managers’ index on Saturday highlighted pressures facing the world’s second-largest economy from escalating trade tensions with the U.S.

Catastrophe

Elsewhere, Hurricane Dorian, tied in ranking as the most powerful storm to hit land along U.S. Atlantic shores, slowed to a crawl over the Bahamas and while the National Weather Center said it is still “dangerously close” to the Florida shoreline a direct hit seemed less likely.

Argentina’s government is imposing currency controls to halt the flight of dollars out of the country as it teeters on the brink of default. Turkey’s lira jumped after data showed the economy shrank less than expected in the second quarter.

Here are some key events coming up:

  • Australia sets monetary policy on Tuesday.
  • Fed speakers include New York Fed’s John Williams on Wednesday and Fed chair Jerome Powell on Friday.
  • The U.S. jobs report on Friday is projected to show nonfarm payrolls rose by 158,000 in August, slightly above the month prior. Estimates of the employment situation are for unemployment to be steady at 3.7% and the average hourly earnings rate of increase to slow to 3.0%.

These are the main moves in markets:

Stocks

  • Futures on the S&P 500 Index declined 0.9% as of 4:51 p.m. New York time.
  • The Stoxx Europe 600 Index increased 0.3%.
  • Germany’s DAX Index advanced 0.1%.
  • The U.K.’s FTSE 100 Index increased 1%.
  • The MSCI Asia Pacific Index fell 0.3%.

Currencies

  • The Bloomberg Dollar Spot Index gained 0.2%.
  • The euro dipped 0.1% to $1.0969.
  • The British pound dipped 0.7% to $1.2065.
  • The Japanese yen climbed 0.1% to 106.20 per dollar.
  • The Hong Kong dollar was little changed at 7.8426 per U.S. dollar.
  • The Turkish lira strengthened 0.4% to 5.8074 per dollar.

Bonds

  • Germany’s 10-year yield was little-changed at -0.705%.
  • Britain’s 10-year yield decreased six basis points to 0.415%.

Commodities

  • Gold increased 0.6% to $1,528.95 an ounce.
  • Brent crude dipped 1% to $58.66 a barrel.

    Read more: https://www.bloomberg.com/news/articles/2019-09-01/yen-gains-yuan-slips-as-new-tariffs-kick-in-markets-wrap?srnd=premium-europe