Global stocks are mixed on Monday after the positive sentiment from Asian markets disappeared during the early trading in Europe and main indexes turned down.
Worries of the prolonged US-China trade spat, however, still hovered over markets – with no sign of a truce in sight. Goldman Sachs over the weekend warned that a trade deal was unlikely before the 2020 US presidential election. During the weekend, Donald Trump warned that the next round of talks between the two countries may not happen.
Market participants have been monitoring the dollar/yuan exchange rate closely following an escalation in trade tensions between Washington and Beijing.
The yuan depreciated past the 7-per-dollar level last week for the first time since the global financial crisis in 2008. The move prompted the US Treasury Department to designate China as a currency manipulator.
Asian markets recap
Most of the indexes in the Asia-Pacific ended the first session of the week with gains, though they could not find a single direction earlier in the session.
In China, the mainland index Shanghai Composite rose by 1.45%, while the Shenzhen Composite added 1.99% to its value. The UBS economists have lowered China’s growth prospects as a result of new tariffs expected to come into force in 2019 and 2020. Their assessment was reduced from 6.2% to 6.1% and from 6.1% to 5.8%, respectively. Further escalation of the trade war could potentially reduce China’s GDP growth to 5.5% in 2020, according to the UBS economists.
At the Hong Kong Stock Exchange, the Hang Seng wiped out 0.44% of its value. Cathay Pacific’s shares plummeted by more than 4% after it stopped its pilot from participating in anti-government protests in the city. The company said it would be forbidden for “overly radical” staff to fly to the mainland. Hong Kong riots continue for the tenth consecutive week after on Sunday there were new clashes between police and protesters.
Markets in Japan, India, and Singapore are closed on Monday for national holidays.
The Australian benchmark S&P ASX 200 rose by a minimum of 0.09%. The shares of the mining companies Rio Tinto, BHP and Fortescue fell by 2.75%, 0.75%, and 3.99% respectively.
In South Korea, the local index Kospi recovered from its earlier losses and eventually moved up by 0.23%.
European markets mid-session recap
European shares bounced back on Monday after a tumultuous week highlighted by US-China trade tensions and Italy’s political turmoil, with a bidding war for German lighting group Osram possibly heating up deal-making in the region.
The pan-European index STOXX 600 climbed 0.1% to 371.91 points at 09:30 GMT and all sub-sectors rose, but trading remained thin as most key markets in Asia were shut for holiday. German index DAX 30 is up by 0.24% to 11,721.50 points, while French CAC 40 wiped out earlier gains and sank by 0.1% to 5,322.66 points. The situation with British blue-chip FTSE 100 after declining by 0.8% to 7,233.57 points.
The bidding war for Osram got more intense after Swiss-listed sensor specialist AMS said it was ready to pay 10% more than Bain Capital and Carlyle.
Osram shares were up 10%, while AMS shares fell 9%.
Wall Street pre-session recap
The US stock index futures were lower Monday morning, amid worries that an ongoing trade dispute between Washington and Beijing could tip the world and US economies into recession.
At around 05:50 a.m. ET, Dow futures slipped 123 points, indicating a negative open of more than 110 points. Futures on the S&P and Nasdaq were both slightly lower.
The Federal Budget for July is expected to be published at around 2:00 p.m. ET.
In corporate news, Sysco and Barrick Gold are both expected to publish quarterly earnings before the opening bell.