Posts Tagged ‘Jerome Powell’

Trade-Talk Progress Lifts U.S. Stocks

December 12, 2018
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*Stock Futures Rise on WSJ Report That China Plans to Boost Access for Foreign Companies

*S&P Futures Up 1.3% Vs. 0.9%

*DJIA Futures Up 1.4% Vs. 0.9%

(This article will be updated)

Global stocks gained Wednesday on a fresh wave of trade optimism and climbing oil prices, shrugging off a leadership challenge against U.K. Prime Minister Theresa May.

U.S. futures put the S&P 500 and the Dow Jones Industrial Average on course to rise 1% at the open, with trade-sensitive stocks like Caterpillar and Cisco up 2% and 1.1% in premarket trade, respectively. Meanwhile rising oil prices helped push Exxon Mobil stock 2.1% higher ahead of the market open.

Brent crude oil prices rose 1.6% to $61.18 a barrel and West Texas Intermediate Futures were up 1.5% at $52.58 a barrel, after weekly American Petroleum Institute figures released Tuesday revealed a larger-than-expected fall in U.S. inventories.

Stocks in Europe built on Tuesday’s gains, with the pan-continental Stoxx Europe 600 index up 1.3% in afternoon trade, while the British pound edged up 0.7% but remained near its lowest level in 20 months.

Lawmakers in the U.K.’s ruling Conservative party initiated a no-confidence vote against Mrs. May. On Monday, she postponed a parliamentary vote on her Brexit bill, which prompted a new volley of criticism over her handling of the country’s exit from the European Union. The yield on U.K. 10-year government bonds was at 1.23%, up from 1.18% late Tuesday. Yields rise as prices fall.

Traders at the New York Stock Exchange on Tuesday.
Traders at the New York Stock Exchange on Tuesday. PHOTO: BRENDAN MCDERMID/REUTERS

Rises in European stocks echoed gains in Asia, where the Nikkei climbed 2.2% and Hong Kong’s Hang Seng Index rose 1.6% as signs of a further softening in trade tensions revived risk appetite. Benchmarks in Taiwan, South Korea and Singapore all increased more than 1%.

Details continued to emerge from the first trade talks between Washington and Beijing, with China agreeing to boost purchases of soybeans and other crops, and to reduce auto tariffs.

The warming in U.S.-China trade relations has prompted cautious optimism among some investors, said Viktor Hjort, global head of credit strategy at BNP Paribas.

“A resolution on global trade is one of the most important issues for markets going into 2019,” Mr. Hjort said. “The positive angle is that U.S. and Chinese negotiators appear to be making an effort, but I think at this point, any absence of bad news is good news.”

President Trump said in an interview with Reuters he would intervene in the Justice Department’s case against Huawei Chief Financial Officer Meng Wanzhou if it would help smooth a trade deal with China. Ms. Wanzhou was granted bail by a Canadian judge Tuesday, after her arrest last week sent shock-waves through global stocks.

Uncertainty around trade will remain elevated, though, with technological and intellectual property disputes between Washington and Beijing unlikely to die down despite more conciliatory rhetoric, said Ann-Katrin Petersen, investment strategist at Allianz Global Investors.

The Chinese yuan was last up 0.1% against the U.S. dollar. The WSJ Dollar Index, which measures the buck against a basket of other currencies, was up 0.2%, its five-day gains eroded to 0.4%.

U.S. investors were also keeping an eye out for inflation data, due out later in the day. It comes a day after producer price data, another gauge of inflation, signaled a third straight monthly rise. The numbers will be scrutinized in the context of next week’s Federal Reserve meeting, at which investors broadly expect Chairman Jerome Powell to raise interest rates.

CME Group data gave a 78.,4% probability that Mr. Powell will announce an interest-rate increase.

Market participants will closely monitor the no-confidence vote on U.K. Prime Minister Theresa May’s leadership later Wednesday, although British assets’ initial reaction to the announcement was muted. The U.K.’s FTSE 100 index was last up 1.3%, broadly in line with gains elsewhere in Europe, while the FTSE 250 was up 1.2%.

More volatility may be ahead for U.K. assets, though, with some analysts seeing the confidence vote as a binary event for sterling.

Wednesday’s vote is the latest in a series of developments that have prompted investors from outside the U.K. to limit their exposure to Brexit uncertainty in recent months, said Emmanuel Cau, head of European equity strategy at Barclays.

“Global investors have left the U.K. equities and FX markets and not many people have the ability to trade on what’s going to happen,” said Mr. Cau. “In this particular situation, nobody’s been able to make forecasts so they’ve stopped trying.”

A victory for Mrs. May could prompt a rally as large as 2% for the pound, while defeat would shave off another 3%, Nomura said in a note.

Elsewhere in Europe, investors monitored the reaction to French President Emmanuel Macron’s decision to cut taxes in the wake of protests. The move may test the EU’s budgetary rules and embolden other members, such as Italy, to do the same.

In commodities, gold was up 0.2% at $1,249.50 a troy ounce.

Write to David Hodari at David.Hodari@dowjones.com

https://www.wsj.com/articles/trade-talk-progress-lifts-global-stocks-11544606026?mod=hp_lead_pos3

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U.S. Adds Below-Forecast 155,000 Jobs as Wage Gain Misses

December 7, 2018
  • Monthly earnings increase 0.2%, compared with 0.3% forecasts
  • Unemployment rate holds at 3.7%, lowest level since 1969
U.S. Adds 155,000 Jobs in November, Jobless Rate Holds Steady at 3.7%

U.S. jobs and wages rose by less than forecast in November while the unemployment rate held at the lowest in almost five decades, indicating some moderation in a still-healthy labor market.

Image result for U.S. Auto workers, factory, photos

Nonfarm payrolls increased by 155,000 after a downwardly revised 237,000 gain in the prior month, a Labor Department report showed Friday. The median estimate in a Bloomberg survey called for an increase of 198,000. Average hourly earnings rose 0.2 percent from the prior month, compared with forecasts for 0.3 percent, though wages matched projections on an annual basis, up 3.1 percent for a second month.

Treasury yields initially dipped and the dollar declined as the report added to signs that economic growth is cooling a bit, following weakness in business-equipment orders and an ebbing of consumer optimism. While the data may spur more concern over the outlook after stocks and bond yields tumbled this week, some investors may see the prospect of a slower pace of Federal Reserve interest-rate increases as a positive following an expected hike this month, as equity futures rose following the jobs data.

“It’s not like 155,000 is a terrible number, but it’s below what people were looking for,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. After an unusually strong two quarters for the economy, “we’re looking for growth to step down this quarter and you should probably also expect to see the labor market cool off some. It’s consistent with the economy coming off what people call a sugar rush.”

For the Fed’s interest-rate hikes, “December is pretty close to a done deal,” Feroli said. “For next year, it depends what the data looks like the next couple of months. It doesn’t feel like things are softening in an alarming way. If it’s really soft, they’ll take a break.”

The jobless rate was unchanged at 3.7 percent in November, matching estimates. Fed Chairman Jerome Powell said late Thursday that the U.S. labor market is “very strong” by many measures and that the economy is “performing very well overall.”

Even so, one key risk is the trade war between the U.S. and China, the world’s two largest economies. While the nations agreed last weekend on a 90-day pause for new tariffs, the accumulated levies and developments have created uncertainty for companies and may weigh on the employment outlook.

Retail Payrolls

Retailers showed solid demand for workers overall, hiring 18,200 people in the month before Christmas; general-merchandise stores added the most employees while clothing and electronics stores cut workers. Transportation and warehousing, a category closely linked to retail, also saw gains of 25,400 in the month.

Construction jobs rose by 5,000, the weakest since a decline in March, as gains cooled among residential specialty trade contractors. Manufacturing remained strong at an increase of 27,000.

The monthly gain in average hourly earnings for all private workers followed a downwardly revised 0.1 percent increase, the report showed. The annual increase topped 3 percent for a second month, reflecting how companies are steadily raising pay to attract and retain workers as the availability of workers tightens.

The gains probably still aren’t fast enough, though, to spur concerns of runaway inflation among Fed officials. While the unemployment rate is well below the level that central bankers consider sustainable in the long run, inflation has remained close to the central bank’s target, leading some to question whether the Fed should keep raising interest rates.

Here are other highlights from the report:

Payrolls

  • Revisions subtracted 12,000 jobs from payrolls in the prior two months, resulting in a three-month average gain of 170,000.
  • Private payrolls rose by 161,000, compared with the median estimate for 198,000; government payrolls decreased by 6,000.
  • Service providers added 132,000 jobs, including 40,100 in health care and social assistance. The 32,000 gain in professional and business services was the smallest since December 2017.

Wages

  • Average hourly earnings for production and non-supervisory workers increased 3.2 percent from a year earlier, following 3.2 percent in the prior month.
  • The average work week decreased to 34.4 hours from 34.5 hours in the prior month; a shorter workweek has the effect of boosting average hourly pay.

Households

  • The participation rate was unchanged from the prior month at 62.9 percent. The measure tracks share of working-age people either with jobs or actively looking.
  • The employment-population ratio, another broad gauge of labor-market health, was unchanged at 60.6 percent.
  • The U-6, or underemployment rate, rose to 7.6 percent from 7.4 percent. This measure includes part-time workers who want a full-time job and people who are less active in seeking work.

https://www.bloomberg.com/news/articles/2018-12-07/u-s-payrolls-rise-below-forecast-155-000-as-wage-gain-misses

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Economists, Wall Street split on Fed signals

November 30, 2018

Economists and investors have been scratching their heads this week over signals from the Federal Reserve, which left the future of US monetary policy open to broadly divergent interpretations.

In remarks delivered Wednesday in New York, Fed chairman Jerome Powell uttered words that set Wall Street on fire.

Claiming that benchmark lending rates were “just below” a range of estimates for “neutral,” that is, neither stimulating nor slowing growth, Powell sent a signal that markets took to mean the Fed might ease off on raising rates in 2019.

Traditionally, stock markets love lower interest rates.

© GETTY IMAGES NORTH AMERICA/AFP/File | Claiming that benchmark lending rates were “just below” a range of estimates for “neutral,” Fed chairman Jerome Powell sent a signal that markets took to mean the Fed might ease off on raising rates in 2019

And as a result, Wall Street on Wednesday had its best day since March, with the Dow Jones Industrial Average rising 2.5 percent and European equities lifted higher as well.

Minutes released Thursday from the Fed’s last policy meeting also showed some policymakers believed going above neutral could slow the economy needlessly.

And Powell’s words stood in stark contrast to his remarks of a month earlier, when he said rates were still “a long way” from neutral, perhaps suggesting the Fed actually had a lot more tightening to do.

Currently, the Federal Open Market Committee forecasts three quarter-point hikes for next year after a December increase, which is virtually guaranteed.

The neutral rate can seem like a central bankers’ Holy Grail: the “Goldilocks” setting for monetary policy, neither so low as to allow excess inflation nor so high as to weigh on the economy.

Nevertheless, it is a tricky concept: economists put the range between 2.5 percent and 3.5 percent. The US federal funds rate range is now 2.0 – 2.5 percent.

And some economists say the markets misread Powell.

Tom Porcelli of RBC Capital Markets said investors were wrong to interpret Powell’s words as “dovish.”

“Powell is not suggesting that since they are just below the range they may stop soon. All he is doing is pointing out an obvious idea,” Porcelli wrote in a client note.

But Powell’s most recent words should be taken along with other recent remarks in which he showed concern for the global economic outlook.

– ‘An absurd concept’ –

He said then that growth abroad was likely to weaken and that US fiscal stimulus, which had goosed consumption, would soon fade.

On Wednesday, Powell also emphasized these uncertainties.

“We also know that the economic effects of our gradual rate increases are uncertain and may take a year or more to be fully realized,” he said, adding that there was “no preset policy path.”

“We will be paying very close attention to what incoming economic and financial data are telling us.”

According to Joseph LaVorgna, chief Americas economist at Natixis, “the Fed needs to stop raising rates.”

“The neutral rate is an absurd concept. We already passed that, as the housing market shows,” he said on CNBC, referring to this year’s steady decline in home sales and construction — something analysts partly blame on higher mortgage rates.

Minutes released Thursday from the Fed’s November 7-8 policy meeting showed disagreements about the path of interest rates, with some policymakers worrying that tightening too fast could stem economic growth.

But Fed members agreed they would offer fewer signals about the future in their public statements, insisting, as Powell did this week, that they would instead monitor economic data and respond accordingly.

October inflation figures published Thursday showed upward price pressures right at the Fed’s two percent target while consumers continued to spend at a brisk pace.

The rate hike likely coming on December 19 would raise the benchmark lending rate, which influences borrowing costs throughout the wider economy, to 2.5 percent.

But from there, paths diverge. Oxford Economics now predicts a single increase in 2019 while JP Morgan and Goldman Sachs see four.

And any signs of an increase continued to be met by vituperation from President Donald Trump, who has denounced the current tightening cycle at the Fed, which Congress made independent of the White House.

AFP

Asian Markets: Dollar down but stocks up in Asia on Fed hopes, focus on Trump-Xi

November 29, 2018

The dollar extended losses in Asia while equities rallied after the head of the Federal Reserve hinted at a softer pace of interest rate hikes, though investors remain wary about the weekend’s crunch trade talks between Donald Trump and Xi Jinping.

US markets were sent soaring Wednesday after Fed chief Jerome Powell said borrowing costs were still historically low but only “just below” the neutral level, a rate that neither stimulates nor restrains the economy.

While the central bank is widely expected to lift rates, his comment was a far cry from his characterisation last month of them being “a long way from neutral”.

© Getty Images North America/Getty Images | The dollar extended its losses in Asia after dovish comments from Federal Reserve head Jerome Powell

The fear of higher US interest rates — fuelled by a surging economy — has been a key driver of a global equity sell-off over the past few months, while the dollar has soared as traders put cash into the US looking for better, safer returns.

Observers said the remarks provided some much-needed cheer ahead of the festive period.

“Powell’s dovish pivot reduces nagging concerns about vigorous interest rate hikes while providing the market with one of the best holiday gifts, a significant bounce in global equity markets,” said Stephen Innes, head of Asia-Pacific trade at OANDA.

The dollar was down against its major peers as well as high-yielding and emerging market currencies, which have suffered a painful 2018. The pound even managed to strengthen despite warnings about the dire consequences of a no-deal Brexit from the Bank of England.

Among the big winners, the South African rand and Mexican peso each climbed more than one percent, Indonesia’s rupiah was 0.9 percent up and Australia’s dollar jumped 0.8 percent.

– ‘Too early to call Santa rally’ –

Asian equities tracked a rally in New York, where the Dow and S&P 500 surged more than two percent while the tech-rich Nasdaq piled on three percent.

Hong Kong and Shanghai each rose 0.4 percent in early trade while Tokyo was 0.9 percent higher going into the break.

Sydney added 0.5 percent, Singapore rallied one percent and Seoul was up 0.8 percent, with Wellington, Manila, jakarta and Taipei also registering strong gains.

Powell is “taking away the concern about aggressive interest-rate increases, which resolves one of the issues that hung over the markets during the last couple of months”, Bob Phillips, at Spectrum Management Group, said.

“We still have the trade war issue with China and we’ll see how that works out this week. If that comes out positive, we’ll have a decent rally at the end of the year.”

The meeting between the leaders of the world’s top two economies is being watched with trepidation following a series of mixed signals from Washington.

In the latest development ahead of Saturday’s talks at the G20 in Buenos Aires, US Trade Representative Robert Lighthizer said Beijing had failed to offer “meaningful reform” on its trade policies that he says hurts US jobs.

Taking aim at “China’s aggressive, state-directed industrial policies”, Lighthizer also threatened tariffs on Chinese autos.

His comments come a day after top White House advisor Larry Kudlow told journalists Trump “said there’s a good possibility we can make a deal” and two days after the president warned of more levies if he and Xi do not reach an agreement.

“While global equity markets are revelling in the afterglow of (Powell’s comments), in the wake of US Trade Representative Lightizer’s statement… it’s far too early to suggest that a Santa Claus rally is in the cards,” said Innes.

Both main oil contracts edged up but remain under pressure at 13-month lows after Wednesday’s plunge of about 1.5 percent, which was fuelled by a tenth straight weekly increase in US stockpiles, adding to fears of a supply overhang.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 0.9 percent at 22,378.46 (break)

Hong Kong – Hang Seng: UP 0.4 percent at 26,777.21

Shanghai – Composite: UP 0.4 percent at 2,611.43

Pound/dollar: UP at $1.2830 from $1.2824 at 2140 GMT

Euro/pound: UP at 88.64 pence from 88.61 pence

Euro/dollar: DOWN at $1.1371 from $1.1369

Dollar/yen: DOWN at 113.55 yen from 113.65

Oil – West Texas Intermediate: UP 30 cents at $50.59

Oil – Brent Crude: UP 10 cents at $58.86 per barrel

New York – Dow Jones: UP 2.5 percent at 25,366.43 (close)

London – FTSE 100: DOWN 0.2 percent at 7,004.52 (close)

AFP

Powell Sees Solid Economic Outlook as Rates ‘Just Below’ Neutral

November 28, 2018

Federal Reserve Chairman Jerome Powell said interest rates are “just below” the so-called neutral range, softening previous comments that seemed to suggest a greater distance and spurring speculation central bankers are increasingly open to pausing their series of hikes next year.

Image result for Jerome Powell, photos

Wall Street embraced the news with a rally for Treasuries and surge of more than 2 percent for major U.S. stock indexes. His “just-below” comment tempered remarks last month that markets read as a signal of more tightening. Speaking on Oct. 3, Powell said that “we may go past neutral. But we’re a long way from neutral at this point, probably.”

In his speech Wednesday to the Economic Club of New York, Powell said the Fed’s benchmark interest rate was “just below the broad range of estimates of the level that would be neutral for the economy — that is, neither speeding up nor slowing down growth.”

The S&P 500 was up 1.6 percent as of 1:26 p.m. in New York, on track for its biggest rally in three weeks, while the Dow Jones Industrial Average rose as much as 2 percent. The rise in Treasuries pushed down the yield on 10-year notes as low as 3.04 percent, from 3.07 percent before Powell’s speech. The Bloomberg Dollar Spot index was down 0.6 percent after rising earlier in the day.

If rates are closer to what policy makers ultimately judge is the neutral level, that could signal the Fed will tighten monetary policy less than previously projected. Eurodollar futures pricing reacted to Powell’s comments, reflecting even firmer expectations that the Fed will hike only once next year.

Powell’s remarks on the economy and monetary policy were seen as keeping the Fed on track to raise interest rates in December. They offered few explicit clues, however, as to how many hikes he thinks will be necessary in 2019. Powell repeated his view that the Fed will have to be especially responsive to incoming economic data.

“We also know that the economic effects of our gradual rate increases are uncertain, and may take a year or more to be fully realized,” he said. “While FOMC participants’ projections are based on our best assessments of the outlook, there is no preset policy path,” Powell said, referring to the central bank’s Federal Open Market Committee, which sets interest rates.

Investors Skeptical

Even before the speech, investors had grown skeptical that Fed officials will reach their own median projection for three hikes in 2019 against a backdrop of slowing growth and uncertainty over the U.S.’s ongoing trade dispute with China.

“As always, our decisions on monetary policy will be designed to keep the economy on track in light of the changing outlook for jobs and inflation,” Powell said.

The Fed still sees the economic outlook as relatively strong. “My FOMC colleagues and I, as well as many private-sector economists, are forecasting continued solid growth, low unemployment, and inflation near 2 percent,” Powell said in the speech.

On the same day the Fed released its first-ever semi-annual Financial Stability Report, Powell highlighted some concern over corporate debt levels, pointing especially to highly-leveraged borrowers who may “surely face distress if the economy turned down.” Still, he judged the area posed little systemic risk, labeling broader, overall risks to financial stability as “moderate.”

“Such losses are unlikely to pose a threat to the safety and soundness of the institutions at the core of the system,” he said.

— With assistance by Sarah McGregor

https://www.bloomberg.com/news/articles/2018-11-28/powell-sees-solid-economic-outlook-as-rates-just-below-neutral

European Stocks, U.S. Futures Up; Fed Chair Jerome Powell Speech Wednesday

November 28, 2018

Stocks in Europe rose alongside U.S. futures, tracking gains in Asia as investors rekindled their risk appetite before a speech by the chair of the Federal Reserve. The dollar and Treasuries were steady.

Image result for Jerome Powell, cnn, photos

Technology companies and retailers were the best performers in the Stoxx Europe 600 Index, which struggled to maintain early gains following an upbeat session across most of Asia. Contracts on the Dow, S&P and Nasdaq were also in the green. The 10-year Treasury yield drifted ahead of Jerome Powell’s speech. The pound trimmed some of the previous session’s losses as U.K. Prime Minister Theresa May appeared to back down in a key Brexit battle with Parliament. European bonds nudged higher and the single currency was range bound. Brent crude handed back earlier gains to trade little changed.

The debate on the pace of monetary policy tightening in the U.S. next year has intensified this week ahead of Powell’s speech that will be parsed for any hints on prospects for a pause in rate increases next year. On the outlook for trade, a lot also rides on the meeting between President Donald Trump and his Chinese counterpart Xi Jinping in Argentina this week. Trump is open to a deal with China but is ready to impose more tariffs if the upcoming talks don’t yield progress, Larry Kudlow, the president’s top economic adviser, told reporters Tuesday.

Elsewhere, emerging-market currencies were steady and their shares climbed. Bitcoin rose to near $4,000 after plunging earlier in the week.

Terminal subscribers can read our Markets Live blog.

Coming Up

  • Presidents Donald Trump and Xi Jinping plan to meet at the G-20 summit in Argentina that kicks off on Friday.
  • Federal Reserve Chairman Powell addresses the New York Economic Club on Wednesday.
  • Thursday sees the release of the minutes from the Federal Open Market Committee’s November meeting.

These are the main moves in markets:

Stocks

  • Futures on the S&P 500 Index gained 0.2 percent as of 10:39 a.m. London time, to the highest in more than a week.
  • The Stoxx Europe 600 Index increased 0.2 percent.
  • The MSCI All-Country World Index climbed 0.2 percent to the highest in more than a week.
  • The MSCI Emerging Market Index advanced 0.8 percent to the highest in more than a week.

Currencies

  • The Bloomberg Dollar Spot Index increased less than 0.05 percent to the highest in more than two weeks.
  • The euro was unchanged at $1.1289, the strongest in more than two weeks.
  • The Japanese yen gained less than 0.05 percent to 113.76 per dollar.
  • The British pound jumped 0.3 percent to $1.2781.
  • The MSCI Emerging Markets Currency Index fell less than 0.05 percent to the lowest in almost two weeks.

Bonds

  • The yield on 10-year Treasuries decreased less than one basis point to 3.05 percent.
  • Germany’s 10-year yield dipped one basis point to 0.34 percent, the lowest in more than 12 weeks.
  • Britain’s 10-year yield declined two basis points to 1.372 percent, the lowest in more than three months.
  • The spread of Italy’s 10-year bonds over Germany’s fell three basis points to 2.9103 percentage points.

Commodities

  • The Bloomberg Commodity Index dipped 0.1 percent to the lowest in 17 months.
  • West Texas Intermediate crude climbed less than 0.05 percent to $51.57 a barrel.
  • LME copper advanced 0.5 percent to $6,151.00 per metric ton, the biggest gain in a week.
  • Gold declined 0.1 percent to $1,213.48 an ounce, the weakest in almost two weeks.

— With assistance by Andreea Papuc, and Adam Haigh

https://www.bloomberg.com/news/articles/2018-11-27/asia-stocks-to-gain-amid-trade-talk-dollar-rises-markets-wrap?srnd=premium

Asia markets mixed as Trump-Xi takes centre stage

November 28, 2018

Asian markets mostly rose Wednesday as they await this weekend’s high-stakes meeting between Donald Trump and Xi Jinping, but dealers remain cautious with the threat of an escalation in the trade war if the pair fail to reach a deal.

Image result for xi jinping, donald trump, photos

Also on the radar is a speech by Federal Reserve boss Jerome Powell, which will be pored over for signs of an easing in its pace of interest rate hikes after his deputy hinted at gradual rises and Trump hit out at recent increases.

Wall Street provided a positive lead following soothing comments from top White House economic advisor Larry Kudlow on the chances of a trade deal when the leaders of the world’s top two economies meet Saturday.

Image result for larry Kudlow, photos

Larry Kudlow

“The president said there’s a good possibility we can make a deal and he’s open to it but certain conditions have to be met, certain things have to be changed,” Kudlow told a White House briefing.

The remarks came a day after the president warned that if he cannot reach a deal with Xi he expects to increase tariffs on $250 billion of Chinese goods and impose levies on all the other goods the US imports from the country.

While observers do not expect a wide-ranging deal to be made at the meeting, which takes place on the sidelines of a G20 summit in Buenos Aires, there is the possibility of an agreement that will allow the two to reach a consensus down the line.

“It will depend a lot about the kind of comments that will come out after the meeting,” Massimiliano Bondurri, founder and chief executive officer of SGMC Capital in Singapore, told Bloomberg TV.

“We don’t expect anything saying a deal will never be found, we expect some formal comments will be made as in discussions will be ongoing, but we haven’t found any agreement as of yet, so that’s likely to weigh on the risk sentiment on global markets.”

– Eyes on Fed’s Powell –

In early trade Hong Kong and Shanghai were each up 0.9 percent while Tokyo rallied 1.1 percent.

Sydney eased 0.2 percent and Singapore dropped 0.1 percent but Seoul was 0.1 percent higher while Wellington, Taipei, Mumbai and Jakarta were all slightly stronger.

Powell’s speech later in the day has taken on more significance after Trump said he was “way off base” for continuing with his interest rate hikes.

“I’m doing deals and I’m not being accommodated by the Fed,” Trump told the Washington Post in his latest swipe at the central bank boss he handpicked for the job. Powell has dismissed similar attacks from the White House in the past.

While the bank is expected to lift rates next month, traders will be looking to see if the Fed chief indicates a slowing of its tightening drive in light of softer readings at home and signs of global weakening.

On Tuesday Fed Vice Chairman Richard Clarida that hinted at a more cautious approach.

Expectations that rates would continue to rise through to 2020 — making it more expensive to borrow for investing — have weighed on global markets this year.

In foreign exchanges the pound continues to struggle after tumbling Tuesday on Trump’s warning that Theresa May’s EU divorce deal could damage her chances of striking a post-Brexit trade agreement with the US.

The British prime minister, who has embarked on a nationwide drive to lobby the public, is also facing an uphill struggle to get her plan through parliament, which is mostly opposed to it. A vote is slated to take place on December 11.

– Key figures around 0350 GMT –

Tokyo – Nikkei 225: UP 1.1 percent at 22,197.85

Hong Kong – Hang Seng: UP 0.9 percent at 26,575.56

Shanghai – Composite: UP 0.9 percent at 2,596.84

Pound/dollar: UP at $1.2738 from $1.2729 at 2140 GMT

Euro/pound: DOWN at 88.63 pence from 88.71 pence

Euro/dollar: DOWN at $1.1289 from $1.1293

Dollar/yen: DOWN at 113.77 yen from 113.79

Oil – West Texas Intermediate: UP 25 cents at $51.81 per barrel

Oil – Brent Crude: UP 22 cents at $60.43 per barrel

New York – Dow Jones: UP 0.4 percent at 24,748.73 (close)

London – FTSE 100: DOWN 0.3 percent at 7,016.85 (close)

Asian markets mixed as Trump threatens to ramp up trade war

November 27, 2018

Asian markets were mixed Tuesday as dealers focused on crunch G20 talks between Donald Trump and Xi Jinping, with the US president warning he will ramp up his trade war with China if the two do not reach a deal.

With the economic superpowers in the middle of an increasingly bitter standoff, there are hopes the two leaders will be able to work out an agreement that brings them back from the brink of a tariffs row that threatens to dent global growth.

In an interview with the Wall Street Journal published Monday, Trump said he thought it “highly unlikely” the US would hold off more than doubling duties on $250 billion of Chinese imports if there is no breakthrough.

© AFP | With just days before a key meeting with Xi Jinping, Donald Trump has threatened to take his trade war with China to another level

“If we don’t make a deal, then I’m going to put the $267 billion additional on,” he told the newspaper, referring to the remainder of Chinese imports that so far have not been hit with tariffs.

“The only deal would be China has to open up their country to competition from the United States.”

While some observers suggested the comments were a typical Trump ploy to apply maximum pressure on Beijing heading into the meeting, there remain fears about what the tycoon has in mind.

“It doesn’t sound like we will see Donald the Deal Maker but instead Trump the Trade Warrior at G20,” said Stephen Innes, head of Asia-Pacific trade at OANDA.

Asian traders moved cautiously in early exchanges after Monday’s global rally, which was fuelled by rising oil prices, Italy’s softer tone in its budget standoff with Brussels and Britain’s Brexit agreement with the European Union.

– Oil outlook warning –

Tokyo ended the morning 0.1 percent higher, Shanghai added 0.1 percent and Sydney rose 0.5 percent but Hong Kong and Singapore each slipped 0.6 percent.

Seoul and Wellington both added 0.3 percent but Taipei shed 0.6 percent and Manila gave up 0.5 percent.

While the meeting is the main event this week, investors are also keeping an eye on speeches from top Federal Reserve officials including boss Jerome Powell, which could signal a softer pace of interest rate hikes.

Rising US borrowing costs — fuelled by surging US growth — have been a major cause of concern for investors but recent comments from the central banker appear to show a more dovish outlook for 2019 as the global economy slows.

On oil markets both main contracts remained under pressure despite Monday’s jump, with market-watchers waiting for next month’s gathering of OPEC and non-OPEC members hoping they will announce a cut in output.

The commodity has been hammered since early October by a series of issues including the uncertain global outlook, the trade war, rising supplies, slowing demand and weakness in China.

As trade tensions begin to bite on the global economy, analysts are predicting slower growth into next year, meaning there would be less demand for oil.

“It has been our long-held view that slower global economic activity would be a factor weighing on oil demand in 2019 and that the market would move into surplus,” London-based Capital Economics said.

– Key figures around 0245 GMT –

Tokyo – Nikkei 225: UP 0.1 percent at 21,843.37 (break)

Hong Kong – Hang Seng: DOWN 0.6 percent at 26,226.26

Shanghai – Composite: UP 0.4 percent at 2,586.54

Euro/dollar: UP at $1.1332 from $1.1326 at 2130 GMT

Euro/pound: UP at 88.46 pence from 88.44 pence

Pound/dollar: UP at $1.2811 from $1.2806

Oil – West Texas Intermediate: DOWN 26 cents at $51.37 per barrel

Oil – Brent Crude: DOWN 17 cents at $60.31 per barrel

New York – Dow Jones: UP 1.5 percent at 24,640.24 (close)

London – FTSE 100: UP 1.2 percent at 7,036.00 (close)

AFP

Asian Stocks Mixed; Energy Stocks Underperform Amid Lower Oil Prices — PetroChina Hits Eight-Month Low

November 26, 2018

 Asian stocks were mixed in morning trade on Monday. Energy stocks underperformed as oil prices plunged to their lowest levels in more than a year last week.

Stock Markets4 hours ago (Nov 25, 2018 09:44PM ET)
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© Reuters. © Reuters.

Investing.com – Asian stocks were mixed in morning trade on Monday. Energy stocks underperformed as oil prices plunged to their lowest levels in more than a year last week.

Santos Ltd (AX:STO) fell 3.5%, PetroChina Co Ltd Class H (HK:0857) slid 1.3%, and Woodside Petroleum Ltd (AX:WPL) was down 2.2%. Oil prices saw a seven-week-sell-off while crude futures traded in bear market territory amid growing worries of an oversupply.

Australia’s ASX 200 slipped 0.7% by 9:50 PM ET (02:50 GMG).

Major miners declined amid worries over weaker demand from China, the largest consumer of metals.

Rio Tinto (LON:RIO) fell 3% while Fortescue Metals Group Ltd (AX:FMG) declined 1.5%. BHP Billiton Ltd (AX:BHP) also dropped 3%.

“I heard some Chinese investors are shooting (down) the nickel price. They think nickel production in Indonesia will bring the market into surplus next year, and demand for stainless will be bad,” CRU analyst Peter Peng said, adding that they expected the nickel price to fall to about $8,000.

China’s Shanghai Composite and the Shenzhen Component slipped 0.1% and 0.4% respectively. All eyes this week would be on U.S. President Donald Trump and his Chinese counterpart Xi Jinping’s planned meeting at the G-20 meeting that kicks off on Friday.

Elsewhere, Hong Kong’s Hang Seng Index was up 1.4%.

Japan’s Nikkei 225 gained 0.4%, while South Korea’s KOSPI traded 0.9% higher.

In other news, European Union leaders gave their official endorsement of U.K. Prime Minister Theresa May’s Brexit withdrawal on Sunday, and warned British politicians that it was the best deal possible for Britain because there is no “plan b.”

May needs to gain Parliamentary approval for the deal in Westminster to move forward with Brexit and failure could lead the U.K. leaving the EU without a deal, according to reports.

Looking ahead, Federal Reserve Vice Chairman Richard Clarida speaks in New York on Tuesday, and Chairman Jerome Powell addresses the New York Economic Club on Wednesday.

Asian Stocks Mixed; Energy Stocks Underperform Amid Lower Oil Prices
 https://www.investing.com/news/stock-market-news/asian-stocks-mixed-energy-stocks-underperform-amid-lower-oil-prices-1699561
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Asian markets mostly up as eyes turn to Trump-Xi talks

November 26, 2018

Most Asian markets rose Monday as investors tentatively pick up cheap stocks, with focus on an expected meeting between Donald Trump and Xi Jinping at the weekend that will be watched for signs of a softening in the China-US trade war.

The broad gains came despite more hefty selling in energy firms after another collapse in oil prices on Friday, while the pound was flat against the dollar after European Union leaders approved a Brexit deal but which must be cleared by British MPs who mostly oppose it.

The positive mood comes at the start of a key week that sees a speech by Federal Reserve boss Jerome Powell and the release of the bank’s last policy meeting minutes, before culminating in the G20 in Buenos Aires.

Image result for Xi Jinping, Donald trump, photos
President Trump welcomed President Xi at his Mar-a-Lago estate in Florida, April 2017

While the summit will focus on several global issues, the meeting between Trump and Xi will get the most attention with the economic superpowers engaged in a trade war just as global growth starts to stutter.

But expectations for a deal to end the standoff are low.

“It would seem that President Xi and President Trump have every incentive to come to an agreement on trade issues, even if that agreement does not significantly change the status quo,” said JP Morgan Asset Management chief global strategist David Kelly.

“However, perceptions are important on both sides. While some hold out the hope that an agreement in principle will be reached, it seems more likely that an agreement will have to wait for more posturing on both sides.”

Stephen Innes, head of Asia-Pacific trade at OANDA, called the meeting “possibly the best and last opportunity for the two leaders to share middle ground”.

“The big question is are we going to see Trump the ‘deal maker’ or Trump the ‘trade warrior’ who wants China to ‘feel more pain’? Keeping in mind that betting against the latter has been a poor bet for traders this year.”

– Crude woes –

Still, the week has started on an upbeat note with Hong Kong jumping 1.5 percent and Shanghai 0.4 percent higher, while Tokyo went into the break 0.8 percent higher.

Singapore added 0.6 percent, Seoul and Taipei each jumped more than one percent, and Manila gained 0.6 percent.

However, Wellington and Sydney both declined.

Oil prices edged up slightly but remain well beaten down after Friday’s hammering, which saw WTI sink 7.7 percent and Brent more than six percent, putting them at lows not seen for more than a year.

The commodity has plunged by about a third from its four-year highs touched at the start of October owing to a range of issues, including a global slowdown, the trade row, rising supplies, softer-than-expected US sanctions on Iran, a stuttering China and strong dollar.

The retreat comes ahead of a meeting of the Organization of the Petroleum Exporting Countries on December 6.

“At the root of the oil market woes, there is too much supply and too little demand,” said Innes. “But much of the near term price recovery will be driven by what happens in G20 in Buenos Aires and at the OPEC summit in Vienna a week later.”

The losses in crude prices have battered energy firms over the past two months, and they continued to fall Monday.

Hong Kong-listed PetroChina fell 1.5 percent, while Sinopec was one percent off. Inpex dropped 2.9 percent in Tokyo and Woodside Petroleum sank 2.2 percent in Sydney.

On currency markets, the pound was barely moved against the dollar as British Prime Minister Theresa May faces an uphill struggle pushing through her draft Brexit deal, with MPs on both sides against it.

May has staked her political future on the agreement and failure would likely lead to the toppling of her government, fuelling fresh uncertainty and hitting the sterling.

EU leaders have said the deal is the best possible one Britain could hope for, meaning a rejection of it will more than likely see the country crash out of the bloc.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 0.8 percent at 21,815.55 (break)

Hong Kong – Hang Seng: UP 1.5 percent at 26,314.63

Shanghai – Composite: UP 0.4 percent at 2,590.89

Pound/dollar: UP at $1.2810 from $1.2805 at 1930 GMT Friday

Euro/dollar: UP at $1.1333 from $1.1331

Dollar/yen: UP at 113.07 yen from 112.85 yen

Oil – West Texas Intermediate: UP 40 cents at $50.82 per barrel

Oil – Brent Crude: UP 67 cents at $59.47 per barrel

New York – Dow Jones: DOWN 0.7 percent at 24,285.95 (close)

London – FTSE 100: DOWN 0.1 percent at 6,952.86 (close)

AFP