BNN Bloomberg's mid-morning market update: May 27, 2019
Stocks climbed in Europe on Monday after markets traded mixed in Asia as investors mulled three weeks of global declines amid escalating U.S.-China trade tensions. Core sovereign bonds in the European Union advanced after mainstream parties held their ground against populists in elections.
The Euro Stoxx index rose, helped by Fiat Chrysler’s proposed merger with France’s Renault, which drove up both carmakers’ shares. U.S. stock futures drifted. While French and German bonds advanced, Italy’s fell as the country was said to face a $4 billion fine over failure to rein in debt. The yuan steadied after a senior Chinese economic official said speculators “shorting the yuan will inevitably suffer from a huge loss.” The yen dropped as the U.S. and Japan discussed a trade deal. The euro held most of its gains from Friday, while the dollar rose against a basket of major currencies.
Holidays in the U.K. and America on Monday helped hold down trading volumes across markets.
Investors are looking for signs of stabilization after trade frictions and mixed economic data put global stocks on course for their first monthly decline of 2019. On a visit to Tokyo, President Donald Trump said the U.S. is making “great progress” in trade negotiations with Japan even though a deal could come only after the country’s elections in July. At the same time, he said America isn’t ready to make a trade deal with China.
“There was a lot of speculation about an early U.S.-China trade deal,” Paul Donovan, chief economist at UBS Global Wealth Management said in a research note. “The problem now is that while individual deals are helpful, the general uncertainty created by trade taxes is creating economic damage.”
Elsewhere, Brent oil futures climbed. Iron ore continued its rally on concern there’s a global shortage in the seaborne market. And Bitcoin climbed to the highest level in a year as it has surged almost 70 per cent this month.
Here are some key events coming up:
Executives from Facebook, Google, Apple, Amazon, Microsoft and Twitter are scheduled to speak before Canadian Parliament’s International Grand Committee on big data, fake news and privacy Tuesday.
China provides the first peek at its May economic performance on Friday, with economists anticipating the official manufacturing PMI will tick down to 49.9 — a contraction — amid the worsening trade war with the U.S.
U.S. GDP data is due Thursday.
And these are the main moves in markets:
The Euro Stoxx Index climbed 0.2 per cent as of 11:16 a.m. New York time. Futures on the S&P 500 Index declined less than 0.05 per cent. The Shanghai Composite Index gained 1.4 per cent, the largest rise in more than a week. The MSCI Asia Pacific Index advanced 0.1 per cent. The MSCI Emerging Market Index climbed 0.3 per cent.
The Bloomberg Dollar Spot Index advanced 0.2 per cent to 1,204.33. The euro fell 0.1 per cent to $1.1192. The British pound dipped 0.3 per cent to $1.2675.
The onshore yuan gained less than 0.05 per cent to 6.899 per dollar.
Germany’s 10-year yield fell three basis points to -0.15 per cent, the lowest in about three years. France’s 10-year yield declined two basis points to 0.259 per cent, the lowest in more than two years. Italy’s 10-year yield gained 11 basis points to 2.659 per cent, the highest in a week on the biggest climb in more than six weeks.
Brent crude increased 1.4 per cent to US$69.63 a barrel. Iron ore advanced 0.4 per cent to US$106.13 per metric ton. Gold gained less than 0.05 per cent to US$1,285.39 an ounce.
--With assistance from Cormac Mullen, Andreea Papuc and Adam Haigh