Tag: global stocks

Asia stocks step back on tepid Wall Street, oil elevated

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Asia stocks pulled back on Tuesday, after an uninspiring performance on Wall Street eclipsed support from US-China trade optimism, while supply concerns kept crude oil prices near 3-1/2-year highs.

MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.16 percent after rising 0.6 percent the previous day to its highest since late March.

Australian stocks inched up 0.05 percent, South Korea’s KOSPI shed 0.05 percent and Japan’s Nikkei was flat.

Wall Street scraped out gains on Monday after weakness in defensive stocks offset optimism following US President Donald Trump’s conciliatory remarks toward China’s ZTE Corp that helped calm US-China trade tensions. [.N]

Investors in Chinese equities will likely rejig their exposure after MSCI, the US index publisher, published its latest index weighting.

MSCI said on Tuesday that 234 Chinese large caps will be partially included in its global and regional indexes on June 1, following an index review ahead of China’s inclusion in MSCI’s widely tracked equity benchmarks.

Brent crude added 0.2 percent to $78.38 a barrel and in close reach of $78.53, the 3-1/2-year high marked on Monday. US crude oil futures advanced 0.15 percent to $71.07 a barrel and in reach of $71.89, the highest since November 2014 scaled on Thursday.

Oil prices received their latest lift as OPEC reported that the global oil glut has been virtually eliminated. Tensions in the Middle East and uncertainty about output from Iran amid renewed US sanctions have contributed to the recent rise in oil prices.

“The recent rise in prices of crude oil won’t have a broadly negative impact on equity markets if it continues at the current pace,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.

“The rise in oil prices is boding well for certain stock sectors like energy shares.”

In currencies, the dollar index against a basket of six major currencies nudged up 0.1 percent to 92.661.

The greenback took a knock against the euro earlier on Monday after European Central Bank policymaker Francois Villeroy de Galhau said the ECB could give fresh timing guidance of its first rate hike as the end of its exceptional bond purchases approaches.

The US currency managed to bounce back, however, after Cleveland Federal Reserve President Loretta Mester reiterated support for gradual interest rate increases.

The euro stood little changed at $1.1930 after pulling back sharply from the previous day’s high of $1.1996.

The dollar was a shade higher at 109.755 yen, adding to the previous day’s gains.

The currency drew support as US Treasury yields rose amid the easing of US-China trade tensions.

The 10-year Treasury note yield was at 2.998 percent after rising about 2.5 basis points overnight.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Global stocks set for biggest weekly loss in a month, dollar climbs before US payrolls

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

World stocks were set for their biggest weekly loss since mid-March on Friday, while the dollar hovered just below recent four-month highs as investors awaited crucial US jobs data that could cement expectations of further US interest rate rises this year.

MSCI’s All-Country World Index, a gauge of stocks across 47 countries, was up less than 0.1% on the day. It was set for a 1.2% loss this week, its biggest since the week ended March 23.

Investors were cautious after a largely weak performance on Wall Street overnight, as disappointments on the earnings front hit stocks in companies such as Spotify and AIG. Bond yields meanwhile slid following a surprising slowdown in euro zone inflation.

The other issue preying on markets is the trade tension between the United States and China. Top officials from Beijing and Washington have reached a consensus on some aspects of the countries’ trade row, but disagreements over other issues remain “relatively big”, according to China’s Xinhua news agency.

The talks over the past two days have involved a high-level US trade delegation led by Treasury Secretary Steven Mnuchin and top Chinese officials, following months of threats and counter threats from both sides in a series of disputes over trade practices.

“Concerns about the ongoing meeting between US and Chinese officials over trade policy have been cited as one factor contributing to some of yesterday’s investor nervousness, however these worries aren’t likely to dissipate any time soon,” said Michael Hewson, chief markets analyst at CMC Markets in London.

Meanwhile, the dollar rose against a basket of currencies, hugging recent highs posted on the back of a sharp rally that has fully reversed its 2018 losses.

It could get more fuel should April US payrolls data, due at 1230 GMT, underscore labour market strength. Non-farm payrolls were likely to have increased by about 192,000 last month, according to a Reuters survey of economists, after rising only 103,000 in March.

But it will be the wages figure that analysts will focus on.

“A further pick-up in the pace of wage gains could be the ‘smoking gun’ for the Fed (Federal Reserve) to express any shift away from ‘roughly balanced’ risks to inflation,” said Mizuho analyst Vishnu Varathan.

While the US Federal Reserve is seen raising interest rates at least two more times this year, expectations of policy tightening from the European Central Bank and the Bank of England are receding.

That has driven the difference between German and US government bond yields to near the highest in nearly three decades, with the short-dated and long-dated “transatlantic spread” standing at 305 and 240 basis points respectively.

Currency markets are betting the relative interest rate advantage will continue to push the dollar higher.

However, analysts at ING reckon the dollar’s recent reversal is likely to be short-lived.

“When dissecting the anatomy of this dollar correction, we feel it exhibits all the hallmarks of a short squeeze. Positioning had clearly been stretched,” they wrote in a research note.

While short dollar bets have receded somewhat, they are still holding near a record $28 billion registered in late April.

The euro meanwhile stood just above four-month lows against the dollar, a level hit after inflation in the euro zone fell short of expectations, according to data on Thursday.

The euro weakness has lifted European stocks however, with a euro zone index set for its sixth straight week of gains.

A pan-European equity benchmark meanwhile was up 0.3% thanks to a flurry of robust earnings reports from companies such as chemicals firm Lanxess, British Airways owner IAG and sports car maker Ferrari.

However, banking stocks lagged following poor updates, including from HSBC and Societe Generale.

Oil prices steadied as global supplies remained tight and the market awaited news from Washington on possible new US sanctions against Iran.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Global stocks advance as trade war worries ease

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

World stocks edged higher as investors responded to signs of an easing of Sino-US trade tensions by dipping back into riskier assets.

The MSCI world equity index, which tracks shares in 47 countries, climbed 0.5 percent, while shares in Europe jumped 1.7% to a two-week high.

Cyclical sectors including basic resources, autos and banks, hit particularly hard over the past two sessions in Europe, led gains.

Sentiment was lifted as Washington expressed a willingness to negotiate, after proposed US tariffs on $50 billion of Chinese goods prompted swift retaliation from Beijing.

US S&P 500 mini futures rose 0.4%, leaving Wall Street poised to build on Wednesday’s rebound.

The dollar also drew support, hitting a two-week high of 90.34 against a basket of major currencies and rising against the safe-haven yen to 107.02 yen.

The euro dipped slightly to $1.2264.

Proposed 25% US tariffs on some 1,300 industrial technology, transport and medical products from China will be subject to a consultation period expected to last around two months.

“I think that the substance of trade restrictions and their real impact will be far less than the headlines,” said Jeffery Becker, Chairman and CEO at Jennison Associates in New York.

“US and Chinese cross-border trade has grown significantly over the last decade and economic inter-dependence runs very deep, deeper than the actual trade numbers.”

Asian stocks also benefited, with MSCI’s broadest index of Asia-Pacific shares outside Japan up 0.6%, a day after it hit its lowest in almost two months.

Japan’s Nikkei ended 1.5% higher. Markets in mainland China, Hong Kong and Taiwan were closed for the Tomb Sweeping Day holiday on Thursday.

Many suspect Washington will likely back down on some fronts after Beijing threatened tariffs on soybeans, the top US agricultural export to China.

That is considered one of the most powerful weapons in Beijing’s trade arsenal given the potential impact on Iowa and other farming states that backed Donald Trump in the presidential election.

US soybeans and corn regained ground on Thursday, following losses of around 2% the previous day.

NOT SO RISKY?

Some observers argue that the global economy is currently running so well that it could cope with the impact of the proposed tariffs, which cover a fraction of world trade.

“We’ve had a few months now where markets have really been going sideways and progressively lower, but at the same time has data really rolled over? The answer is no,” Geoffrey Yu, head of the UK investment office at UBS Wealth Management, said.

“The underlying economy is actually chugging along which will increase the scope for upside surprises on the corporate front, on the economic front and at some point markets will have to catch up to that.”

US data on Wednesday underscored the prevailing bullish view on the economy. Private payrolls increased solidly in March as hiring rose across the board, boding well for Friday’s jobs data.

A correction since January has driven share price valuations down from record levels, attracting bargain hunters.

MSCI ACWI traded at 14.77 times its forward earnings, the lowest in more than two years.

Oil prices gave up earlier gains to trade in negative territory, with U.S. crude futures at $63.24 per barrel.

Bond markets were hit by the recovery in equities as demand for safe-haven assets ebbed. The yield on the German 10-year touched a one-week high of 0.538 percent, while US treasury yields were at 2.821 percent.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow