Friday June 8: Five things the markets are talking about
Global equities saw red overnight, as tech stocks continued their retreat in the Asian session, while in Europe, stocks has been hampered by disappointing industrial production data from Germany.
All market negativity is supporting investors’ risk-off mood ahead of today’s G7 summit beginning in Quebec, Canada.
The G6+1 meeting is expected to be an intense affair amidst heightened trade tensions between the U.S and some of its closest allies.
Naturally, the market is looking for further clues on trade after the Trump administration’s decision last week to impose tariffs on steel and aluminum imports from fellow G-7 countries. With President Trump already announcing that he is leaving early on Saturday don’t expect much to be achieved.
U.S Treasuries are steady after 10-year yields tumbled as much as -9 bps yesterday, and the dollar has edged higher.
On Tap: Canadian employment numbers are expected at 08:30 am EDT.
1. Stocks see red
In Japan, the Nikkei share average snapped a four-day winning streak overnight as investors stayed on the sidelines ahead of major economic events, while large-cap stocks weighed on the index. The Nikkei ended -0.6% lower, but is still up +2.4% for the week, its biggest gain in nearly three-months. The broader Topix fell -0.4%.
Down-under, Aussie shares ended lower in light trading as investors kept to the sidelines ahead of key central bank meetings next week with losses in industrial and material stocks outweighing gains in consumer and energy stocks. The S&P/ASX 200 index was down -0.2%. It advanced nearly +1% this week, in its first weekly gain in four. In S. Korea, the Kospi was down -0.7%.
In China and Hong Kong stocks fell overnight, as investors were worried about the impact from the listings of big-caps, and amid uncertainty over trade relations. The CSI300 index was down -1.3%, while the Shanghai Composite Index also lost -1.3%. In Hong Kong, the Hang Seng index dropped -1.2%, while the Hong Kong China Enterprises Index lost -1.3%.
In Europe, regional bourses trade lower as the risk-off trade intensifies, and is tracking U.S index futures lower. The tech sector in particular has been one of the hardest hit on rumours that Apple has warned on a -20% decline in new iPhone parts orders.
U.S stocks are set to open deep in the ‘red’ (-0.6%).
Indices: Stoxx600 -0.6% at 383.7, FTSE -0.7% at 7649, DAX -1.2% at 12656, CAC-40 -0.3% at 5432, IBEX-35 -0.9% at 9740, FTSE MIB -1.5% at 21433, SMI -0.8% at 8484, S&P 500 Futures -0.6%
2. Oil prices fall on dip in China demand, surging U.S output, and gold higher
Oil prices are under pressure as signs of weakening demand in China and surging U.S output weighs on markets despite support from supply woes in Venezuela and OPEC’s production cuts.
Brent crude futures are at +$76.79 per barrel, down -53c, or -0.7%, from yesterday’s close. U.S West Texas Intermediate (WTI) crude futures are down -38c, or -0.6% at +$65.57 a barrel.
Customs data this morning showed that China’s May crude oil imports eased away from a record high hit the previous month, with state-run refineries entering planned maintenance.
May shipments were +39.05m tonnes, or +9.2m bpd vs. the +9.6m bpd in April.
Further weighing on prices has been surging U.S output. According to this week’s EIA report, it hit another record last week at +10.8m bpd.
Ahead of the U.S open, gold prices have eased as the dollar has inched up, while investors’ remain cautious ahead of today’s G7 meeting and other key events next week such as a U.S Federal Reserve policy meeting and a U.S-North Korea summit (June 12).
3. Investor demand push sovereign yields lower
In Europe, the cost of insuring exposure to Italy’s sovereign debt has jumped this morning due to broad-based global risk aversion and unease ab