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Crude oil in New York climbs amid rising U.S.-Saudi tensions
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Brexit stalemate deepens after weekend talks, weighs on pound
A rebound in global equities Friday saw no traction at the start of the week, with markets in Asia dropping on Monday. The pound slipped as a Brexit deal hung in the balance with just days to go until a critical deadline.
Equities in Japan, Hong Kong and Australia bore the brunt as a risk-off mood returned in choppy trading, following a weekend of warnings on global economic fragility from finance chiefs meeting at an annual IMF gathering. China’s stocks fluctuated near a four-year low. International Monetary Fund Managing Director Christine Lagarde advised to be ready for more market volatility, speaking after the worst sell-off in global stocks since February. China’s ambassador to the U.S., in a rare American Sunday TV appearance, said his nation didn’t want a trade war but will respond.
Treasuries nudged higher amid the cautious tone in markets, with the yield on the 10-year benchmark slipping to 3.15 percent. The yen pushed higher alongside gold prices. Oil climbed amid rising tensions between the U.S. and Saudi Arabia over a missing journalist.
The gloomy remarks over the weekend contrasted with the modest recovery in stocks that was staged Friday, when news on U.S. bank earnings helped cool anxiety that corporate profits might not live up to lofty expectations. Goldman Sachs, Morgan Stanley and Netflix are among those reporting this week. Also to come: minutes from the Federal Reserve’s latest policy meeting due on Wednesday, with investors keen to follow the debate on projections for further interest rate rises.
“Investors are now trying to decide how they should accurately price growth,” Fabiana Fedeli, Robeco’s global head of fundamental equities, said on Bloomberg TV in Hong Kong. “Now the key question investors are having is ‘am I really paying the right price for this growth because we think earnings are fantastic, but what’s going to happen ahead, are they still going up to the extent valuations would imply?”’
The pound fell as a surprise Sunday visit to Brussels by U.K. Brexit Secretary Dominic Raab failed to break the deadlock. People familiar with the situation said there were signs of progress, but officials on both sides played down the chances of an imminent agreement and denied a Politico report that a deal was done.
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Here are some key events coming up this week:
- On Monday, the U.S. retail sales report will give clues about consumer sentiment in September. Consensus sees healthy pick-ups in both the core and headline readings.
- APEC finance ministers meet in Port Moresby, Papua New Guinea
- China’s new yuan loans may have risen to 1.36 trillion yuan ($196 billion) in September from August’s 1.28 trillion yuan as officials sought to buoy economic growth. On Tuesday, consensus is for CPI to pick up to 2.5 percent and PPI to slow to 3.6 percent.
- Third-quarter GDP for China comes Friday, with headline growth forecast to slow to 6.6 percent year on year from 6.7 percent, in addition to last month’s retail sales and factory output.
These are the main moves in markets:
Stocks
- Japan’s Topix index fell 1 percent as of 12:39 p.m. in Tokyo.
- Australia’s S&P/ASX 200 Index slid 1.2 percent.
- South Korea’s Kospi index lost 0.6 percent.
- Hong Kong’s Hang Seng Index fell 1.1 percent.
- The Shanghai Composite sank 0.8 percent.
- Futures on the S&P 500 Index fell 0.3 percent. The benchmark tumbled 4.1 percent last week.
- The MSCI Asia Pacific Index lost 1 percent.
Currencies
- The yen rose 0.1 percent to 112.07 per dollar.
- The offshore yuan was at 6.9165 per dollar.
- The Bloomberg Dollar Spot Index rose less than 0.1 percent after dropping 0.3 percent last week.
- The euro slipped 0.1 percent to $1.1546.
- The British pound fell 0.4 percent to $1.3103.
Bonds
- The yield on 10-year Treasuries ticked about one basis point lower to around 3.15 percent after closing Friday at 3.16 percent, down about 7 basis points on the week.
- Australia’s 10-year bond yield fell five basis points to 2.70 percent.
Commodities
- West Texas Intermediate crude rose 1 percent to $72.07 a barrel.
- Gold rose 0.4 percent to $1,221.56 an ounce.
By Adam Haigh
October 15, 2018, 2:42 PM GMT+11
Source: Bloomberg