Market news

White House Split Over Hardline Response to China Trade War

Bloomberg.com — Some White House officials are trying to restart talks with China to avoid a trade war before U.S. tariffs on Chinese products take effect July 6, three people familiar with the plans said, setting up a battle with others in the administration who favor a harder line.

Staff of the National Economic Council have contacted former U.S. government officials and China experts in recent days to gauge chances for high-level talks in the next two weeks, the people said on condition of anonymity to discuss the inquiries. One idea NEC staff floated was inviting Chinese Vice President Wang Qishan before the tariff deadline, they said.

The outreach signals a willingness by some U.S. officials to seek a truce before $34 billion in Chinese products are hit with tariffs rather than trigger a trade war between the world’s two largest economies. Still, the chances of such negotiations happening in the near term are slim as long as opponents inside the administration favor penalizing Beijing. President Donald Trump has shown no signs of backing down. […]

Asian Stocks Pare Losses; Oil Rallies on OPEC: Markets Wrap

Bloomberg.com — Asian stocks pared earlier losses to trade mixed amid ongoing concern global trade restrictions will curb growth. Oil prices rose as OPEC moved closer to a deal on output.

Declines in Japanese and Hong Kong equities were offset by advances in their Chinese and Korean counterparts. U.S. futures pointed to gains after the S&P 500 Index closed lower and the Dow Jones Industrial Average posted its eighth straight drop. The dollar steadied with Treasuries. West Texas oil rose above $66 as OPEC and its allies reached a preliminary agreement despite strong opposition from Iran to boost production.

A quick escalation of tension between the U.S. and China this month is threatening the growth outlook just as the Federal Reserve signals a faster pace of policy tightening. While many are hoping for a truce before Chinese goods get hit with tariffs, President Donald Trump has shown no signs of backing down.

“People want to be defensive,” Hao Hong, chief strategist with Bocom International Holdings Co., told Bloomberg TV. “Even if you catch a temporary bottom and there’s a technical rebound, it’s not enough to produce a sustainable rally.”

Elsewhere, the pound extended gains triggered by the BOE’s chief economist vote for an immediate rate hike. Italian assets were hit after two prominent critics of the European Union were given key posts in parliament.

Claims for unemployment related benefits have fallen by 3 thousand in USA.

Investing.com – The number of Americans who first applied for unemployment benefits last week fell by 3 thousand and amounted to 218 thousand, according to a report of the US Labor Department.

The indicator for the previous week was revised from 218 to 221 thousand. Experts  expected  the increase from the previously announced level of 2 thousand, to 220 thousand on average.

The indicator remains at an extremely low level: its value is below 300 thousand, indicating an active growth of the labor market.

The average number of applications for the last four weeks, less volatile, fell to 221 thousand from 225 thousand.

Meanwhile, the number of continuing to receive unemployment benefits for the Americans for the week ended June 9 jumped by 22 thousand – to 1.723 million from a revised 1.701 million in the previous week.

Analysts predicted an increase of 13 thousand from previously announced 1.697 million, to 1.71 million.

Bank of England left the interest rate unchanged

Investing.com – The Bank of England, as a result of the June meeting, left the benchmark interest rate at 0.5% per annum, the Central Bank’s Monetary Policy Committee (MPC) said in a statement. The British Central Bank has kept the rate at this level since November 2017, when it was raised for the first time in a decade.

The Bank of England also retained the volume of purchase of corporate bonds at the level of 10 billion pounds and the volume of the program of buying government bonds at the level of 435 billion pounds sterling ($ 570.2 billion).

The bank’s decisions coincided with market expectations.

Emerging Stocks Drop, Dollar Gains on Trade Woes: Markets Wrap

Bloomberg.com — Most Asian stocks declined on Thursday as concern simmered about an escalation of trade tensions between the U.S. and China, and Goldman Sachs Group Inc. turned cautious on the region’s equities. The dollar strengthened.

Among the biggest declines were benchmarks in Malaysia, the Philippines and Thailand, which fell at least 1 percent. Japan’s shares were little changed. Australian stocks by contrast reached an eight-year high as banks drove a continuing rally. Indonesia’s rupiah dropped more than 1 percent to pace declines in emerging-market currencies. Oil slipped below $66 a barrel ahead of a crucial OPEC meeting that will decide on output.

“At the moment we just want to be a little bit cautious,” Colin Graham, chief investment officer of multi-asset solutions at Eastspring Investments, said on Bloomberg Television. “Overall Goldilocks is still alive and it’s going to be fine this year — risk assets are still going to outperform safe-haven assets — but we are going to see more choppy returns.”

Worries about fresh volatility stemming from developments on trade linger after a tumultuous start to the week triggered by a ratcheting up of skirmishes by U.S. President Donald Trump with China. Goldman Sachs, a long-time bull, has pared its 12-month target for an index of Asian stocks excluding Japan, citing escalating trade tension between the U.S. and China just as global growth is slowing with tighter U.S. monetary policy and a stronger greenback. Meanwhile, Morgan Stanley said Hong Kong’s equity sell-off has further to run and slashed its 12-month for the Hang Seng Index.

Elsewhere, New Zealand’s dollar fell to its weakest in six months after data showed first-quarter growth slowed, bolstering the case for the central bank to keep rates at a historic low. Philippine stocks tumbled as the nation’s finance chief played down concerns about inflation, a falling currency and a trade deficit.

Futures on the Nasdaq Composite Index climbed after the underlying index ended at an all-time high, buoyed by a rally in Facebook Inc. Exchange-traded funds tracking equities in Argentina and Saudi Arabia gained after MSCI Inc. upgraded the nations to emerging-market status.

What to Expect on Bank of England Decision Day

Bloomberg.com — The Bank of England is set to wait a little longer before following up on last year’s interest-rate hike after a run of mixed economic data.

All of the 38 analysts surveyed by Bloomberg expect the Monetary Policy Committee to vote in favor of keeping rates unchanged on Thursday. A 7-2 split is seen as the mostly likely outcome, with Ian McCafferty and Michael Saunders continuing their push for an immediate increase. The decision will be published at noon, alongside a statement and minutes of the deliberations.

Following officials’ decision to keep rates at 0.5 percent in May, a month once seen as almost certain for a hike, BOE Governor Mark Carney said that he and the majority “thought it made sense to take a bit of time” to gauge the economy after the first-quarter weakness. Markets will be hoping the June minutes shed further light on that assessment after figures that have provided no clear direction. […]

OPEC Works Toward Deal as Saudis Propose Plan for Higher Output

Bloomberg.com — The odds of OPEC reaching an oil-production deal increased as Iran edged away from a threat to veto any agreement that would raise output and Saudi Arabia put forward a plan that would add about 600,000 barrels a day to the global market.

At the end of a day of diplomatic back-and-forth in Vienna on Wednesday, delegates were increasingly positive that a deal would be reached at Friday’s meeting of the Organization of Petroleum Exporting Countries.

After sitting down with several counterparts, Iranian Minister Bijan Namdar Zanganeh said he was optimistic about the outcome of the OPEC meeting, a marked contrast to comments on Tuesday when he said a deal was unlikely. He also spoke with Russian Energy Minister Alexander Novak by phone.

“I’m confident that at the end of the day reason will prevail,” Saudi Energy Minister Khalid Al-Falih told reporters in Vienna after a succession of meetings. He echoed earlier comments from OPEC Secretary-General Mohammad Barkindo. […]

Stocks Climb as Trade Angst Eases; Dollar Steadies: Markets Wrap

Bloomberg.com  — European stocks rose with U.S. futures, tracking gains in Asia, as the panic surrounding a potential global trade war showed signs of easing. Treasury yields and the dollar stabilized, and oil edged higher.

All sectors advanced as the Stoxx Europe 600 Index opened in the green following three days of losses. Earlier in Asia, equity markets struggled for direction before climbing. Shares in Japan and China both reversed declines, though the Shanghai Composite Index remained below the 3,000 level it fell through on Tuesday. Oil recovered to trade above $65 a barrel even as Iran signaled OPEC may fail to agree on output limits when it meets at the end of the week. The euro and pound fell.

The threat from U.S. President Donald Trump for tariffs on an additional $200 billion of Chinese goods was the latest in a series of shots in a spat between the world’s two biggest economies that could yet escalate into a full-blown trade war. Assets in emerging markets have been hit especially hard as the tensions coincide with projections for steeper U.S. interest-rate hikes.

Developing-nation stocks rose on Wednesday, paring some of their plunge a day earlier. Turkey’s lira fell again ahead of an election this weekend.

Elsewhere, the onshore yuan rose after the People’s Bank of China set its daily reference rate at a stronger level than all analyst and trader projections. Indonesia’s stocks were the worst performers in Asia as traders returned after a holiday. […]

Oil Trades Below $66 as Trade War Risk Looms Before OPEC Meeting

Bloomberg.com – Oil traded below $66 a barrel as escalating trade tensions between the world’s two largest economies added jitters to a market that’s already nervous about the upcoming OPEC meeting on output policy.

Futures in New York rose 0.5 percent. Prices fell 1.2 percent on Tuesday as China vowed to retaliate against President Donald Trump’s threat to slap tariffs on another $200 billion in Chinese imports, raising fears the growing spat could slow down economic growth and cut oil demand. Meanwhile, Iran put itself on a collision course with Saudi Arabia at this week’s OPEC meeting, rejecting a potential compromise that would see a small production increase.

Oil has been stuck mostly below $67 this month as investors assess mixed signals from the Organization of Petroleum Exporting Countries and its allies on whether they will ease production cuts to offset potential supply losses. Russia is advocating a 1.5 million-barrel increase in collective daily output, while Iran, Iraq and Venezuela argue it’s too soon to back away from the historic caps that helped erode a worldwide glut.

“Investors would have taken more of a wait-and-see stance in ordinary circumstances before an OPEC meeting, but factors that are not unique to the oil market, such as the risk of a U.S.-China trade war, could further lower crude prices,” Jun Inoue, a senior economist at Mizuho Research Institute Ltd., said by phone from Tokyo. “If prices fall too much, that could affect OPEC’s discussions on output policy.” […]