Global stocks edged cautiously higher on Monday heading into this week’s Fed rate meeting, with investors betting on possible support from major central banks around the world.
European markets are and the US equity futures edged higher Monday, while the dollar held at a nearly two-week high against it global currency peers, as investors adopted a cautious stance on risk heading into this week’s Federal Reserve meeting while closely monitoring military developments in the Gulf region.
The key event for investors this week is definitely the Federal Reserve meeting against expectations that the US central bank may soon lower interest rates. Still, there are some factors which might hinder the lowering of interest rates. This is the approaching G20 meeting that the US and China at least can theoretically enter into a trade agreement, the desire for the Fed’s decisions not to be influenced by Donald Trump, and the avoidance of the risk that rising interest rates in December last year would seem like a mistake in monetary policy.
The US President Donald Trump said on Friday “it doesn’t matter” if Chinese leader Xi Jinping attends the G20 summit later this month in Osaka, Japan, predicting a trade deal with Beijing would occur at some point anyway.
Asian markets recap
Asian stock exchanges are mixed on Monday with investors waiting for the US Federal Reserve meeting scheduled for Tuesday and Wednesday this week.
The indexes in mainland China – Shenzhen Composite and Shenzhen Component -fell by 0.5% and 0.6% respectively. Meanwhile, the Shanghai Composite added 0.2% to 2,887.62 points. According to data published on Friday, China’s industrial production growth slowed down to 5%, which is its lowest levels in 17 years and well below analysts’ expectations of a 5.5% rise. This data in the context of the trade war with the United States raises concerns about the slowdown in the country’s economy.
On the Hong Kong stock exchange, Hang Seng advanced by 0.6% just a day after large-scale demonstrations in the city, which continued after the freezing of the extradition bill in China. The investor commented that the situation in Hong Kong is likely to have a limited impact on the markets as they are focused on the “bigger picture” at the moment.
Japanese blue-chip index Nikkei 225 rose by a minimum of 0.03%. Topix fell by 0.32%. The shares in Rakuten Inc rose to 52-week highs, advancing by 4.16%. Some bluechip shares, led by Sony, SoftBank and Uniqlo casual wear operator Fast Retailing, gained ground, offsetting declines in chip-related shares. The Bank of Japan’s two-day meeting through Thursday will be monitored as it may affect the dollar-yen rate.
In South Korea, the index Kospi fell by 0.24%
The Australian S&P ASX 200 was down by 0.22%.
European markets mid-session recap
European stocks make a positive start after the mixed run in Asia. The pan-European STOXX Europe 600 is up by 0.11% to 379.21 points, being under pressure from airline stocks.
German index DAX 30 inched higher by 0.17% to 12,116.46 points 10:00 GMT, The stocks of Deutsche Lufthansa collapsed by 11.5% after the company issued a profit warning. Deutsche Bank stocks are traded 2.0% higher after releasing the news that the bank is preparing to create a 50 billion EUR “bad bank” as chief executive Christian Sewing shifts Germany’s biggest lender away from investment banking.
French index CAC 40 is up by 0.25% to 5,381.16 points. The shares of Air France KLM fell by 4.25% after the warning of Deutsche Lufthansa. The stocks of carmakers Renaults and Peugeot are up by 0.74% and 0.34%, respectively.
British index FTSE 100 stalled at 7,345.71 points at mid-session trading. The Bank of England meets this week, with little expected but all eyes on central bank policymaking globally after two weeks in which hopes of policy easing have driven a stock market recovery from losses in May. Today, the stocks of EasyJet and British Airways owner IAG gave up 4.3% and 3.3%, respectively. Engineering services group Babcock added 4.1% after the company confirmed a media report that it had received and rejected a highly preliminary takeover bid from rival Serco earlier this year.
Wall Street pre-session recap
The US stock index futures were higher on Monday morning, as investors look ahead to a crucial Federal Reserve meeting this week.
Around 6 a.m. ET, Dow futures indicated a positive open of more than 45 points. Futures on the S&P and Nasdaq were both trading higher.
The investors will be looking ahead to Empire State manufacturing data at 8:30 a.m. ET, and the National Association of Home Builders housing index due at 10 a.m. ET.