World Shares Slide on Wall Street Sell-Off, China Worries

International investors that have been piling into China in recent years are now bracing for one of its great falls as the troubles of over-indebted property giant China Evergrande come to a head.

The developer’s woes have been snowballing since May. Dwindling resources set against 2 trillion yuan ($305 billion) of liabilities have wiped nearly 80% off its stock and bond prices, and an $80 million bond coupon payment now looms next week.

Hong Kong’s Hang Seng index dropped to its lowest level so far this year.

A report from the U.S. Commerce Department showed retail sales unexpectedly rose in August, indicating America’s economic recovery is strengthening on positive trends in consumer spending. The strong data lifted the dollar and pushed up treasury yields, and sent safe-haven gold down nearly 3%.

However, the U.S. labor market remains under pressure, with initial jobless claims rising by slightly more than expected last week.

Losses on Wall Street were dominated by technology and energy stocks as oil retreated from recent highs now that the threat to U.S. Gulf production from Hurricane Nicholas has receded.

The MSCI world equity index was last down by 0.29%, off an all-time high on Sept. 7. MSCI’s broadest index of Asia-Pacific shares outside Japan closed down 0.87%.

European equities bucked the trend, and Europe’s STOXX 600 closed up 0.44%.

The Dow Jones Industrial Average fell 91.51 points, or 0.26%, to 34,722.88, the S&P 500 lost 11.6 points, or 0.26%, to 4,469.1 and the Nasdaq Composite dropped 15.52 points, or 0.1%, to 15,146.01.

“(Retail spending) categories that were strongest in August were in Covid-beneficiary categories,” wrote Ellen Zentner, chief U.S. economist at Morgan Stanley.

“Now incorporating today’s retail sales release, we lift our real (personal consumer expenditures) tracking to +1.9% and GDP to +5.0%.”

Markets remain focused on next week’s Federal Reserve meeting for clues as to when the U.S. central bank will start to taper stimulus, especially after the flurry of U.S. economic data out this week.

On Tuesday, data from the U.S. Labor Department showed inflation cooling and having possibly peaked, but inflation in Britain was the highest in years, according to data on Wednesday.

“We have an unusual situation where the overall market is sideways to lower but with a  risk-on trend underneath and that’s down to signs the Delta variant may be peaking in the U.S., which is driving people into reflation and recovery plays,” said Kiran Ganesh, head of cross assets at UBS Global Wealth Management.

U.S. crude recently fell 1.2% to $71.74 per barrel and Brent was at $74.69, down 1.02% on the day.

The dollar index rose 0.506%, with the euro down 0.51% to $1.1755.

Spot gold slid 2.1% to $1,755.75 per ounce, after hitting an over one-month low of $1,744.30. U.S. gold futures settled down 2.1% at $1,756.70.

Caught in gold’s slipstream, silver was last down 4.3% at $22.79.

The U.S. 10-year Treasury yield was 1.3327%, while core euro zone government bond yields were little changed.

(Reporting by Elizabeth Dilts Marshall; editing by David Evans and Steve Orlofsky)

Marketmind: When the Dragon Sneezes, Europe Catches a Cold

A look at the day ahead from Danilo Masoni.

The STOXX 600 index has fallen 1% so far in September, twice as much world stocks, and while Europe broadly is still in favour with investors and research analysts, the index has slipped all the way down to July lows.

Wall Street’s strength overnight could trigger a relief bounce this morning, but the China woes are far from over.

The worsening crisis at China’s No. 2 property developer Evergrande has sent its shares to decade lows, pushed Asian stock markets to their fourth day of losses. Trading in Evergrande bonds has been suspended. And virus outbreaks are clouding travel plans during next week’s Mid-Autumn Festival.

Europe Inc faces internal woes too. Soaring power prices have prompted Spain to cap energy bills and Italy said on Thursday it plans “short-term measures” to offset the price rises. Worries are other governments could resort to similar measures — at the expense of utility firms.

There’s some market support from signs U.S. inflation has peaked and the world’s biggest economy is in robust shape. Retail sales will be eyed later on for more clues on the health of the world’s largest economy.

Key developments that should provide more direction to markets on Thursday:

Japan’s hot exports growth cools as COVID-19 hits supply chains

Philip Morris seals deal to buy UK’s Vectura with 75% stake tendered; French utility Veolia launches 2.5 bln euro capital increase[nL1N2QI0D1; Vivendi paves way for Lagardere takeover

German car registrations Aug

ECB Speakers: Christine Lagarde

Norges Bank Governor Oystein Olsen speaks

Egypt central bank meeting

U.S. weekly jobless claims/Philly Fed September

U.S. Retail sales/business inventories

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Danilo Masoni; editing by Sujata Rao)

 

Global Shares Rise on Strong U.S. Equities, Factory Data

U.S. factory production data showed that manufacturing remained strong despite a slowdown due to factory closures related to Hurricane Ida and the ongoing microchip shortage.

Also out of the U.S. import prices declined for the first time in 10 months in August. That followed Tuesday data from the U.S. Labor Department showing that inflation cooled last month and may have peaked.

The MSCI All Country World Index 0.21%. The S&P 500 rose from more than a three-week low and the Dow Jones index recovered from a near two-month trough hit on Tuesday.

“The Delta wave is likely receding in the U.S. and globally, and the pandemic recovery should restart,” JPMorgan Securities analyst Marko Kolanovic wrote, referring to the highly infectious coronavirus delta variant.

The Dow Jones Industrial Average rose 230.55 points, or 0.67%, to 34,808.12, the S&P 500 gained 33.31 points, or 0.75%, to 4,476.36 and the Nasdaq Composite added 94.48 points, or 0.63%, to 15,132.24.

The pan-European STOXX 600 index was down 0.80% after data showed that inflation in the U.K. hit a more than nine-year high last month. Economists believe it was largely due to a one-off boost that analysts said was likely to be temporary.

All eyes now are on next week’s U.S. Federal Open Market Committee’s monetary policy meeting. Expectations that the Fed will announce plans to taper its bond-buying program were lower after Tuesday’s softer-than-expected U.S. inflation data, especially as some expect inflation to remain high for months.

Possible increases to the U.S. corporate tax rate remain important in the background, and one bank estimated that raising the corporate tax to 25% could shave 5% off S&P500 earnings in 2022.

“We still have a very fragile market, especially if we get some type of tapering from the Federal Reserve,” said David Wagner, portfolio manager at Aptus Capital Advisors. “Any material change to tax policy can create a more volatile market.”

Data out of China showed that factory and retail output and sales growth hit one-year lows in August, as fresh COVID-19 outbreaks and supply disruptions pointed to a possible economic slowdown in the mainland.

The dollar was last down 0.122% mainly due to a sharp slide USD/JPY’s, which broke below important supports as safe-haven buying bolstered the yen in particular.

The yield on the U.S. government 10-year note was 1.3107%.

U.S. crude settled up 3.1% at $72.61 a barrel, and Brent ended 2.5% higher at $75.46 a barrel.

Spot gold dropped 0.8% to $1,790.56 an ounce. U.S. gold futures fell 0.68% to $1,792.40 an ounce.

(Reporting by Elizabeth Dilts Marshall in New York, Huw Jones in London; Editing by Will Dunham and Marguerita Choy)

European Stocks Under Pressure From Weak China Data

The benchmark STOXX 600 index fell 0.1% by 07:11 GMT.

Asian stocks tumbled after data showed China’s factory and retail sectors faltered in August following fresh coronavirus outbreaks and supply disruptions.

Travel & leisure stocks were the top decliners in Europe, down 1.1%, with gaming companies hit after Macau casino operator stocks plummeted as the government kicked off a public consultation that investors fear will lead to tighter regulations in the world’s largest gambling hub.

The owner of fashion brand Zara Inditex rose about 1% as its sales approached pre-pandemic levels, but Sweden’s H&M slipped 3% as quarterly sales increased less than expected.

UK’s FTSE 100 edged lower and mid-cap stocks fell 0.2% after data showed British inflation hit a more than nine-year high last month.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta)

Luxury, Mining Stocks Weigh on Europe Ahead of U.S. Inflation Data

The pan-European STOXX 600 index was down 0.2% after a partial recovery on Monday from last week’s slump.

Luxury stocks including LVMH, Kering and Richemont fell between 1.6% and 2.0%, tracking their Asian peers lower on concerns about the spread of COVID-19 cases in China.

Jewellery maker Pandora rose 3.7% after it said it aims to achieve sales growth between 6.0% and 8.0% over the coming years.

Mining stocks dragged UK’s commodity-heavy FTSE 100 0.3% lower, even as data showed British employers added a record 241,000 staff to their payrolls last month.

Danish brewer Carlsberg fell 2.6% after a double downgrade to “sell” by Berenberg.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta)

Global Stock Markets Slip on Inflation, Tax, Regulation Worries

Leading U.S. House of Representatives Democrats said they are seeking to raise the tax rate on corporations to 26.5%, up from the current 21%.

The U.S. consumer price data due out on Tuesday will give a broad picture of the economy’s progress ahead of the Federal Reserve’s meeting next week.

The MSCI world equity index, which tracks shares in 45 nations, shed 0.22%, while U.S. stocks were mixed.

The Dow Jones Industrial Average rose 0.4% and the S&P 500 fell 0.17%. The Nasdaq Composite dropped 0.4%, as investors pivoted away from major technology stocks to sectors more likely to benefit from an economic bounce later this year.

The dollar climbed to a two-week peak against a basket of major currencies as investors priced in the possibility that the Federal would reduce its asset purchases.

“Investors are grappling with an unusually wide range of potential economic outcomes beyond the post-pandemic restart, reflected in frequent shifts in equity market leadership and volatile bond yields,” said Vivek Paul, senior portfolio strategist at BlackRock Investment Institute.

The yield on 10-year Treasury notes was down 2 basis points to 1.321%.

European stocks ended higher for the first time in five days on hopes that a strong euro zone economic recovery can outweigh risks of a global slowdown. The pan-European STOXX 600 index was up 0.3% after hitting a three-week low last week.

Asian stocks fell earlier in the day following news of a fresh regulatory crackdown on Chinese firms.

China fired a fresh regulatory shot at its tech giants, telling them to end a long-standing practice of blocking each other’s links on their websites. The Financial Times also reported that China is aiming to break up the payments app Alipay.

The Chinese blue-chip index fell 0.5% and MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.78% lower. Japan’s Nikkei rose 0.22%.

The core reading of the U.S. consumer price index is expected to show a rise of 0.3% in August, down from 0.5% the previous month and 0.9% in June.

The U.S. Federal Reserve is paying close attention to price pressures as it mulls when to begin to reduce its massive bond holdings and how soon to begin lifting rates from near zero. It also remains on the lookout for any signs that price pressures may broaden.

The general air of risk aversion helped lift the dollar index to 92.69, up 0.12%.

Oil prices rose to six-week highs as U.S. output remains slow to return two weeks after Hurricane Ida slammed into the Gulf Coast and worries another storm could affect output in Texas this week.

Brent crude settled up $0.59, or up 0.81%, at $73.51 a barrel. U.S. crude settled up $0.73, or up 1.05%, at $70.45 per barrel.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sujata Rao in London and Elizabeth Dilts Marshall in New York; additional reporting by Wayne Cole in Sydney and Dhara Ranasinghe in London; editing by Emelia Sithole-Matarise, Will Dunham, Chizu Nomiyama and Dan Grebler)

European Stocks Snap 4-Day Losing Streak as Oil, Banks Rise

By Sruthi Shankar and Shreyashi Sanyal

The pan-European STOXX 600 index was up 0.3% after hitting a three-week low last week. Asian stocks, however, fell following news of fresh regulatory crackdown on Chinese firms.

Global stocks have come under pressure recently after months-long gains on worries about inflation, tighter COVID-19 curbs in Asian economies, China’s regulatory moves, and growing views that central banks will soon start paring stimulus.

While those concerns remain, European investors took comfort as the European Central Bank last week raised its growth and inflation projections for this year and beyond, as the euro zone economy recovers quicker than expected from the pandemic shock.

“While we are used to seeing US markets lead the way, there is a feeling that we could see greater catch-up for Europe as high vaccination levels keep deaths relatively stable,” said Joshua Mahony, senior market analyst at IG.

Economy-sensitive sectors, including banks, oil and gas, and construction and materials, rose between 0.9% and 2.8%, while utilities climbed 1.6%.

All eyes will be on the U.S. consumer prices data on Tuesday after soaring producer prices last week raised doubts about the U.S. Federal Reserve’s view that inflation is transitory.

“Some central bankers will have you believe they are happy to hold back on tightening for now, we are seeing very clear signs that this spike in inflation is far from fleeting,” IG’s Mahony said.

Meanwhile, a September market sentiment survey published by Deutsche Bank showed an equity market correction of 5%-10% by the end of the year was the overwhelming consensus.

Among individual stocks, German online pet supplies’ retailer Zooplus AG jumped 9.0% after Hellman & Friedman raised its takeover offer to 3.29 billion euros ($3.89 billion) from an initial offer of 3 billion euros.

Associated British Foods dropped 2.4% as fourth-quarter sales at its Primark fashion business were lower than expected, with shopper numbers hurt by public health measures in its major markets.

Valneva plunged 41.6% after the British government ended a COVID-19 vaccine supply deal with the French company, alleging a breach of obligations that Valneva denies.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru; Editing by Sherry Jacob-Phillips, Uttaresh.V, William Maclean)

Marketmind: Hitting the Buffers

A look at the day ahead from Sujata Rao.

Yet there is no dismissing the brewing concerns — we seem to be past peak liquidity and peak growth, yet inflationary pressures show no sign of abating. Chinese factory gate prices have hit 13-year highs, the ECB just upped inflation projections and later on Friday, we will see what U.S. producer prices looked like in August. Remember last month brought the biggest annual increase in over a decade.

Warnings about input costs are coming through from companies too, with Nestle warning of even higher factory prices in 2022. The question is when these costs trickle down to consumers and their earnings; wage inflation, as we know, tends to be less easily tamed.

It comes as the post-pandemic growth rebound fizzles. Data shows Britain’s economy barely grew in July (versus expectations for a 0.6% expansion), even as tax hikes loom.

What of stimulus? The Bank of England appears well on the road to a 2022 interest rate rise while the Bank of Canada on Thursday flagged plans to stop adding new stimulus and to raise interest rates.

Policy has long been tightening across emerging markets and later on Friday, Russia will likely raise interest rate for the fifth time this year.

Finally, there is no getting away from the fact that the ECB — among the more dovish central banks — has hit peak QE, even though it was at pains on Thursday to describe its stimulus slowdown as recalibration rather than tapering.

So while equity futures signal a more cheerful session in Europe and Wall Street, stocks may face a rocky ride from here.

Key developments that should provide more direction to markets on Friday:

-U.S. President Joe Biden and Chinese leader Xi Jinping spoke for 90 minutes

-China Evergrande bonds rebound as loan payment extensions ease default worries

-Willis Towers Watson has $5 bln of capital, possibly for M&A

-Euro zone finance ministers meet

-Fed speakers: Cleveland President Loretta Mester 1300 GMT

Russia central bank meeting

Ratings: S&P: Ukraine, Ghana, Jordan, Malta; Moody’s: Montenegro

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sujata Rao; Editing by Dhara Ranasinghe)

U.S. Shares Retreat, European Shares end Little-Changed

Major U.S. indexes were lower, pulling back from earlier gains but still close to all-time highs.

The Dow Jones Industrial Average fell 133.74 points, or 0.38%, to 34,897.33, the S&P 500 lost 14.45 points, or 0.32%, to 4,499.62 and the Nasdaq Composite dropped 4.28 points, or 0.03%, to 15,282.36 by mid afternoon.

Federal Reserve Bank Governor Michelle Bowman added her voice Wednesday to the growing number of policymakers who say the weak August jobs report likely won’t throw off the central bank’s plan to trim its $120 billion in monthly bond purchases later this year.

Earlier in the day, U.S. data showed the number of Americans filing new claims for jobless benefits fell to the lowest level in nearly 18 months last week, offering more evidence that job growth was being hindered by labor shortages rather than cooling demand for workers.

After falling as much as 0.9% in morning trade, the pan-European STOXX 600 index ended largely unchanged around 467.57 points. The index had shed 1.5% over the past two days on fears of a more-hawkish-than-expected ECB.

Euro zone bonds yields tumbled as the European Central Bank took its first tentative step in withdrawing COVID-era stimulus. Southern Europe led a fall in euro zone sovereign bond yields.

The euro rose 0.15% against the dollar, climbing for the first time in four sessions, while bond markets cheered by sending French 10-yields negative again.

“We’re seeing some modest weakness mainly because the market is just in flux. There is no real clarity on when we will start to see the Fed and ECB start to pull back stimulus,” said Edward Moya, a senior market analyst with OANDA in New York.

Instead of hinting at any potential end date for its pandemic-era purchase programme, European Central Bank President Christine Lagarde instead channelled the spirit of former British Prime Minister Margaret Thatcher, saying: “The lady isn’t tapering.”

Germany’s 10-year yield, the benchmark for the bloc, fell. [GVD/EUR]

FRAGILE CHINA

MSCI’s benchmark for global equity markets fell 0.33% to 740.33. Emerging markets stocks fell 1.18%.

The UK’s FTSE 100 dropped 1% with low-cost airline easyJet tumbling over 10% as it tapped shareholders for 1.2 billion pounds ($1.7 billion). [.EU]

MSCI’s broadest index of Asia-Pacific shares ended down 1%, which was its worst daily performance since Aug. 19, the last time markets decided they were worried about the U.S. Federal Reserve tapering its massive asset purchase programme.

Chinese tech giants Tencent, NetEase and Alibaba had slumped 8.5%, 11% and 6% respectively after online gaming chiefs were summoned by authorities to check they are sticking to strict new rules for the sector.

“The global story is looking soft and it’s being hit by the Delta variant plus concern about potentially the Fed still moving towards a taper,” said Rob Carnell, Asia head of research at ING. “It’s an unsettling combination of things.”

The China angst had meant Hong Kong, where many heavyweight Chinese firms are also listed, shed 2.3%.

News that Chinese authorities had told gaming firms to resolutely curb incorrect tendencies such as focusing “only on money” and “only on traffic” had hurt companies with large gaming operations. Tencent fell 8.5%, Bilibili lost nearly 9% and NetEase slumped 11%.

There was more turbulence too for the country’s most indebted property giant, Evergrande.

Media reports the company would suspend some interest payments on loans and payments to its wealth management products sent its shares down more than 10% at one point, although they recovered almost half of the drop on news that some creditors had agreed to loan payment extensions.

Korea’s Kospi fell 1.5%, also under pressure from regulatory scrutiny of local tech players. In Korea’s case, fintech names such as Kakao Corp , which sank 7.2%, and Naver Corp, down 6.9%, were in the spotlight.

Australian stocks lost nearly 2% after payrolls data showed a sharp drop in jobs in the first half of August.

Gold steadied in choppy trading, buoyed by a slight retreat in the dollar. Spot bullion prices were up 0.4%.

Oil prices fell on China’s plan to tap state reserves and a smaller-than-expected drawdown in U.S. crude supplies.

Brent crude was last down $1.14, or down 1.57%, at $71.46 a barrel. U.S. crude was last down $1.16, or down 1.66% at %68.15.

($1 = 0.7246 pounds)

(Additional reporting by Alun John in Hong Kong; Editing by Carmel Crimmins and Nick Zieminski)

European Stocks Slide Ahead of ECB Meeting, EasyJet Tumbles

The continent-wide STOXX 600 index was down 0.8%, hitting a three-week low, with UK’s FTSE 100 leading losses with a 1.1% drop and Germany’s DAX touching over a one-month low.

British airline easyJet tumbled 13.8% after it revealed plans to raise 1.2 billion pounds ($1.7 billion) and said it had rejected a takeover offer.

Travel stocks, down 1.8%, fell the most among sectors, while miners, technology and automakers dropped between 1.0% and 1.4%.

The ECB is expected to slow its bond buying via its Pandemic Emergency Purchase Programme (PEPP), according to a Reuters poll, but also reassure markets that this is not the start of a gradual exit from easy policy.

Asian shares dropped more than a percent, with Chinese gaming stocks coming under pressure from fresh regulatory scrutiny, while data showed China’s factory gate inflation hit a 13-year high in August.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Saumyadeb Chakrabarty and Shounak Dasgupta)

Marketmind: Over to You, Christine

A look at the day ahead from Karin Strohecker.

September has already seen many major indexes, from the S&P 500 to STOXX 600, ease after multi-month winning streaks. Both European and U.S. equity futures point to more falls ahead on Thursday, while Treasury and Bund yields are off the mid-July highs hit earlier this week.

But there’s much more than an ECB meeting to fret about — Beijing’s regulatory crackdown shows no sign of a letup.

Chinese gaming and media stocks – including Tencent Holdings and NetEase – have suffered further sharp falls after regulators summoned gaming firms to ensure they implemented new rules for the sector.

The impact of the widening crackdown is being felt as far as Tencent shareholder Prosus in Amsterdam which is set to open 3.5% weaker.

Shares and bonds in the embattled Evergrande Group too slumped further after media reports the property developer would suspend interest payments due on some loans and all payments on its wealth management products.

And then there is the U.S. debt ceiling quagmire, with Treasury Secretary Janet Yellen warning again that cash and extraordinary measures might run out in October.

On the data front, China factory gate inflation jumping 9.5% to a 13-year-high in August shows no let up in price pressures. In Britain, a lack of new homes for sale boosted house prices again.

Corporate news a-plenty too. EasyJet will raise more than 1 billion pounds ($1.4 billion) through a share sale. Similar news elsewhere in the travel sector too, with Japan Airlines announcing $2.7 billion in borrowing to weather the prolonged COVID-19 impact.

Key developments that should provide more direction to markets on Thursday:

ECB holds monetary policy meeting and presser

-Lloyd’s of London swung to H1 pre-tax profit of 1.4 billion pounds, helped by rising premium rates

-Fed speakers: San Francisco Fed President Mary Daly 12:05 GMT; Chicago President Charles Evans 15:05 GMT

-Emerging markets: Malaysia, Peru, Serbia, Ukraine central bank meetings

Auctions: U.S. 30-year bonds, 4-week t-bills.

U.S. earnings: Oracle

For a look at all of today’s economic events, check out our economic calendar.

($1 = 0.7263 pounds)

(Reporting by Karin Strohecker; editing by Sujata Rao)

 

Worries Over Economic Recovery Shake World Stocks, Wall Street

Accommodative central bank policies and optimism about reopening economies have pushed equities to record levels but concerns are growing about the impact of rising coronavirus infections due to the Delta variant.

Markets are also still assessing data from last week which showed the U.S. economy created the fewest jobs in seven months in August, and wondering how the U.S. central bank will respond.

The Fed should move forward with a plan to taper its massive asset purchase programme despite the slowdown in job growth, St. Louis Federal Reserve Bank President James Bullard said in an interview with the Financial Times on Wednesday.

“Everything is tapering, tapering, tapering. We are looking at every single central bank – when is the next one?” said Eddie Cheng, head of international multi-asset portfolio management at Wells Fargo Asset Management, though he added: “The Delta variant impact is still running like a wild card”.

The Dow Jones Industrial Average fell 76.74 points, or 0.22 percent, to 35,023.26, the S&P 500 lost 7.8 points, or 0.17 percent, to 4,512.23 and the Nasdaq Composite dropped 87.96 points, or 0.57 percent, to 15,286.37 by 2:17 p.m. EST (18:17 GMT).

MSCI’s world equity index fell 0.41% by after seven consecutive days of gains.

European stocks fell 1% and hit their lowest in nearly three weeks. Britain’s FTSE 100 struck two-week lows, down 0.75%.

“September is the month investors confront reality,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia, pointing to uncertainty over the Fed’s tapering plans and inflation fears as a reason investors are taking profits or reallocating funds.

The coronavirus Delta variant and concerns over the economic recovery were also weighing.

“What is likely ahead of us is a continued but temporary deceleration of economic activity of one to three months which likely started in August,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.

Federal official Robert Kaplan was due to speak later on Wednesday.

In Europe, markets are focused on whether the European Central Bank will this week begin to scale back its bond purchase programme.

The dollar paired some gains after jumping to a one-week high against a basket of other major currencies. It also hit a one-week peak against the the single currency and was trading at $1.1826.

The dollar’s strength offset investors’ risk aversion to pressure bullion to a two-week low. Spot gold prices fell 0.1%.

Longer-dated U.S. government bond yields slipped on Wednesday coming off a two-day climb after labor market data and ahead of an auction by the Treasury in 10-year notes. Yields on 10-year Treasury notes fell to 1.3495%, retreating from this week’s eight-week highs.

Germany’s 10-year Bund yield also hit eight-week highs before edging lower to -0.32% .

“Fears that central banks might start to taper their asset purchases seems to have knocked away a little confidence, particularly given tomorrow’s ECB decision where many expect we’ll begin to see the start of that process, not least with inflation there running at its highest levels in almost a decade,” Deutsche Bank analysts said in a note.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.77%, stemming an eight-session string of gains.

Chinese blue chips dropped 0.41%, weighed down by recent soft data in the world’s second-biggest economy.

But Japan’s Nikkei jumped 0.89% and hit a five-month high, helped by revised gross domestic product growth figures beating expectations.

Bitcoin continued its rout, down 1.1%.

Shares of Coinbase Global Inc dropped over 2% after the firm revealed it has received a legal notice from the top U.S. markets regulator.

U.S. crude oil jumped 1.39% to $69.32 a barrel and Brent crude rose 1.4% to $72.69 per barrel, with prices supported by a slow restart to production in the Gulf of Mexico after Hurricane Ida hit the region.

For a look at all of today’s economic events, check out our economic calendar.

(Additional reporting by Alun John in Hong Kong; Editing by Kenneth Maxwell & Shri Navaratnam, Editing by William Maclean and Nick Tattersall)

Marketmind: Time to Join the Green Bond Gang

A look at the day ahead from Dhara Ranasinghe.

Germany on Wednesday will sell 10-year green bonds, a day after Spain’s debut green bond garnered an impressive 60 billion euros of demand.

Green debt issuance globally, recently passed $1 trillion for the first time, with 90% of sovereign issuance coming from Europe. Britain will sell its first green bond later this month while the European Union plans its first green issue in October.

A greenium index compiled by UniCredit, has risen to 4 basis points, its highest level, indicating that demand for green paper remains strong and investors are willing to pay a premium to buy green European government debt.

Back to Germany. The benchmark euro zone debt issuer wants to be the first to establish a green bond yield curve and Wednesday’s issuance takes it a step closer to that goal.

Another market that’s seen action this week is Bitcoin. It seems to have stabilised after a 17% plunge on Tuesday, the day it become legal lender for the first time in a sovereign state. However El Salvador’s bitcoin adoption was clouded by the price fall as well as technological glitches and protests by mistrustful citizens.

Global stock markets too have stablised after Tuesday’s wild swings but growth concerns are weighing, with Asian shares down, Europe falling also 1% and U.S. equity futures a touch higher.

Later in the day, watch for U.S. JOLTS job openings data and a raft of Fed speakers. And on Wall Street, GameStop, the original ‘meme stock,’ releases earnings.

Key developments that should provide more direction to markets on Wednesday:

– UK supermarket Morrisons is talking to its private equity suitors and the UK Takeover Panel regarding an auction to settle its future ownership.

– Deutsche Bank, Commerzbank CEOs attend Handelsblatt conference

– Japan upgrades Q2 GDP on stronger business spending

– PayPal heats up buy now, pay later race with $2.7 bln Japan deal

– Interest rate meetings in Canada, Poland, Croatia.

– Fed speakers: New York President John Williams 1710 GMT; Dallas President Robert Kaplan 2200 GMT; Boston Fed President Eric Rosengren, Minneapolis Fed President Neel Kashkari 1800 GMT

– U.S. auctions 10-year bonds.

– US JOLTS job openings, Initial jobless claims, consumer credit

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Dhara Ranasinghe)

 

European Stocks Fall 1% on Growth Worries

The Europe-focussed STOXX 600 index fell 1% by 07:12 GMT – on course for its biggest daily decline in three weeks – after losses overnight on Wall Street’s benchmark S&P 500 and Asian stocks.

Swedish investment company EQT fell 5.9% after a share placing deal, while Stellantis dropped 2.5% after Dongfeng Motor Hong Kong said it had sold shares in the carmaker for about 600 million euros ($710 million).

French drugmaker Sanofi slipped 1.4% after it agreed to buy U.S. biopharmaceutical company Kadmon Holdings Inc in a $1.9 billion deal.

British industrial technology company Smiths Group rose 3.8% after it agreed to sell its medical unit to U.S.-based ICU Medical Inc for $2.4 billion.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Saumyadeb Chakrabarty)

 

World Equities Under Pressure as Economic Worries Mount

Key U.S. equity benchmarks were down and the MSCI world equity index retreated from a record hit overnight, following seven consecutive days of gains to all-time highs. Earlier in the session, hopes of extra stimulus in Japan and strong China trade data had boosted Asia shares.

The Dow Jones Industrial Average fell 209.2 points, or 0.59%, to 35,159.89 and the S&P 500 lost 9.96 points, or 0.22 percent, to 4,525.47 by 2:22 p.m. ET (18:22 GMT). The Nasdaq Composite bucked the trend, adding 0.18% to 15,391.26.

“The combination of exorbitant expectations, nosebleed valuations and slowing macro environment make the go-forward reward/risk outlook less attractive,” said Jeffrey Carbone, managing director at Cornerstone Wealth in Huntersville, North Carolina.

European stocks retraced ahead of an ECB policy meeting on Thursday. The STOXX 600 benchmark fell 0.5% but were not far from last month’s lifetime peak hit.

Data on Friday showed the U.S. economy created 235,000 jobs in August, the fewest in seven months as hiring in the leisure and hospitality sectors stalled, reducing expectations that the Fed will opt for an early tapering of its monthly bond purchases.

The market took the surprisingly soft U.S. payrolls report on Friday “in stride, with the assumption that the COVID-19 Delta variant had an impact on economic activity in August,” Arthur Hogan, chief market strategist at brokerage National Holdings in New York, said in a market note.

Speeches by a number of U.S. policymakers later this week will be closely watched for any indication about how the weak jobs report has impacted the Fed’s plans on tapering its bond purchases and keeping its expansive policy for the near-term.

The recent equity rally started after Fed Chair Jerome Powell’s dovish speech at the Jackson Hole Symposium in August.

“Given that before Jackson Hole many FOMC members had come out in favor of tapering on a tight timetable, we’ll see if they confirm, or align with Powell’s more moderate message,” said Giuseppe Sersale, fund manager at Anthilia.

U.S. government bond yields rose on Tuesday, continuing the climb seen on Friday in the wake of the jobs report and ahead of a fairly busy week of Treasury auctions.

Japanese shares rallied further on hopes the ruling Liberal Democratic Party will offer additional economic stimulus and easily win an upcoming general election after Prime Minister Yoshihide Suga said he would quit.

Tokyo’s Nikkei crossed the 30,000 mark for the first time since April, also helped by an announcement on its reshuffle, and the broader Topix index climbed 1.1% to a 31-year high.

Anthilia’s Sersale said investors had a defensive positioning on Japanese stocks that led to a short squeeze.

“I was positive on Tokyo (stocks) and remain so, but perhaps at this point it is better to look for a less overbought entry point,” he said.

Mainland Chinese shares extended gains, with the Shanghai Composite rising 1.5% to its highest since February, helped by Chinese trade data showing both exports and imports grew much more quickly than expected in August.

“The mood is improving on hopes the government will take measures to support the economy and that the monetary environment will be kept accommodative,” said Wang Shenshen, senior strategist at Mizuho Securities.

A rout in bonds and shares of China Evergrande Group deepened on Tuesday after new credit downgrades on the country’s No. 2 developer.

The euro retreated 0.16% at $1.1849, while Europe’s broad FTSEurofirst 300 index dropped 0.46% to 1,821.56.

The ECB is seen debating a cut in stimulus, with analysts expecting purchases under its Pandemic Emergency Purchase Programme (PEPP) falling, possibly as low as 60 billion euros a month from the current 80 billion euros.

Germany’s 10-year yield hit its highest since mid-July.

The Australian dollar briefly rose after the central bank went ahead with its planned tapering of bond purchases, but quickly gave up those gains after the bank reiterated its need to see sustainably higher inflation to raise interest rates.

The Aussie fell 0.6%, off its 1-1/2-month high set on Friday.

The U.S. dollar rose 0.3% against a basket of other major currencies, pressuring gold prices. Spot bullion prices were down 1.4%. U.S. gold futures settled 1.9% lower at $1,798.5 an ounce.

Elsewhere in commodities, oil prices slid on concerns over weak demand in the United States and Asia. Saudi Arabia’s sharp cuts to crude contract prices for Asia had earlier revived demand concerns.

Brent crude futures fell 1.02% to $71.46 per barrel, while U.S. crude futures declined 1.75% to $68.08.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Chris Prentice in Washington, Danilo Masoni in Milan and Hideyuki Sano in Tokyo; Editing by Jane Merriman, Dan Grebler and Alex Richardson)

European Shares Hover Below Record High, Telecom Stocks Jump

The pan-European STOXX 600 index slipped 0.1% by 07:19 GMT, after coming just a point below its record high in the previous session.

Media and utilities fell the most among sectors, while telecoms gained 0.8%.

Deutsche Telekom rose 2.5% after it struck a share-swap deal with Softbank Group to increase its stake in U.S. unit T-Mobile and sold its Dutch unit.

Shares in Sweden’s Tele2 rose 1%, while KPN gained almost 4%.

Germany’s Allianz slipped 0.5% after Reuters reported that regulators have launched an investigation into the company after the demise of some of its U.S. investment funds last year.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta)

 

Global Stock Benchmark at New High, Dollar Slips

Labor Department data that showed wages increasing more than expected in August raised inflation fears and led longer-dated Treasury yields to jump, while gold advanced to a more than a 2-1/2-month high as the dollar eased.

MSCI’s all-country world index, which is heavily weighted to big U.S. tech, notched a new record as Apple Inc, Amazon.com Inc, Google parent Alphabet Inc and Facebook Inc advanced. The tech gains also helped the Nasdaq set a fresh closing high.

The Dow Industrials and S&P 500 fell as slower U.S. jobs growth raised questions about the pace of the recovery. But a Fed taper announcement is off the table in September, said Lee Ferridge, North American head of multi-asset strategy at State Street Global Markets.

“Support from the Fed for these markets is going to persist. Taper starts later rather than sooner. That’s positive for equities, that’s positive for risk,” he said.

“As long as the Fed is printing, then that means that the equity markets are supported by the whole QE liquidity argument,” Ferridge said.

U.S. employers created the fewest jobs in seven months in August as the Delta variant hurt the leisure and hospitality sector, but a 0.6% increase in wages showed underlying strength in the economy, the jobs report showed.

Nonfarm payrolls increased by 235,000 in August, well short of the 728,000 forecast by economists in a Reuters poll. But the unemployment rate fell to 5.2% from 5.4% in July.

MSCI’s ACWI, which is 60% U.S. equities, rose 0.11% to 746.46, while the Nasdaq gained 0.21%.

The S&P 500 index edged 0.03% lower and the Dow Jones Industrials fell 0.2%. The broad STOXX Europe 600 index of pan-regional stocks closed down 0.56%.

Euro zone business activity, meanwhile, remained strong last month, IHS Markit’s survey showed, suggesting the bloc’s economy could be back to pre-COVID-19 levels by year-end despite fears about the Delta variant.

The European Central Bank meets next week amid callsfrom several hawkish members to slow its pandemic-era asset purchase program. A Reuters poll sees the bank announcing acut to its asset purchases, given a recent spike in inflation.

Yields on the benchmark 10-year Treasury note rose 3 basis points to 1.324% as the U.S. labor report showed a jump in hourly earnings, a potential sign of future inflation.

The dollar index dropped to a low of 91.941, its lowest level since Aug. 4, and was last down 0.09% at 92.1320.

The euro traded flat at 1.1875. Markets are starting to react to the potential for more sustained euro zone inflation and reduced stimulus from the ECB.

The yen slid 0.19% to 109.72.

JAPAN JUMPS, CHINA EASES

Japanese shares jumped after officials said Prime Minister Yoshihide Suga would step down, setting the stage for a new premier after a one-year tenure marred by an unpopular COVID-19 response and rapidly dwindling public support.

Japan’s TOPIX stock index rose to a 30-year high and was last up 1.61%, with the Nikkei gaining 2%. Asian shares are still off their peaks from earlier in the year however, and lagging those elsewhere.

Meanwhile, Chinese blue chips were down 0.5% and Hong Kong was off 0.72% after activity in China’s services sector slumped into sharp contraction in August, a private survey showed on Friday, hurt by restrictions imposed to curb the Delta variant.

Oil prices slipped on the U.S. labor report showing a patchy recovery from the pandemic, but losses were capped by concerns U.S. crude supply would continue to be limited in the wake of Hurricane Ida, which cut offshore U.S. production.

Brent crude futures fell 42 cents to settle at $72.61 a barrel. U.S. crude slid 70 cents to settle at $69.29 a barrel.

Gold advanced more than 1% to its highest in 2-1/2 months as weak U.S. jobs growth drove the dollar lower and cast doubts on the Fed’s tapering timeline.

U.S. gold futures settled 1.2% higher at $1,833.70 an ounce.

(Reporting by Herbert Lash in New York, additional reporting by Huw Jones in London, Alun John in Hong Kong and Kevin Buckland in Tokyo; Editing by Andrea Ricci and Rosalba O’Brien)

European Stocks Mark Worst Fall in 2 Weeks on U.S. Job Jitters

The pan-European STOXX 600 index slipped 0.6%, marking its worst fall in two weeks after data showed the U.S. economy created the fewest jobs in seven month in August. Global equities also tumbled after the data.

Retail stocks were among the worst performers for the day, dropping 0.9%. Bookseller WH Smith, which makes at least a quarter of its earnings from U.S. customers, was the worst performer in the sector, down 3.4%.

Travel stocks sank 1%.

The laggard U.S. data was attributed to a rise in the highly contagious Delta variant of the coronavirus. But analysts saw a bright side in the reading, specifically that weakness in the job market would give less impetus to the Federal Reserve to rein in liquidity measures.

“Friday’s weaker-than-expected jobs puts less pressure on the Fed to taper its stimulus, which is likely to provide a short-term boost for stocks. The stock market loves stimulus and any indication that the Fed will remain fully accommodative is good news for investors,” said Jay Pestrichelli, CEO of ZEGA Financial.

European technology stocks were the best performers for the week, up nearly 2% as investors fled to sectors most resilient to disruptions caused by the pandemic.

A private survey also showed activity in China’s services sector contracted sharply in August as restrictions to curb the COVID-19 Delta variant threatened to derail the recovery.

But euro zone business activity remained strong last month, IHS Markit’s survey showed, suggesting the bloc’s economy could be back to pre-COVID-19 levels by year-end despite fears about the Delta variant of the coronavirus and widespread supply chain issue.

The European Central Bank will meet next week amid calls from several hawkish members to slow down its pandemic-era purchases programme. A Reuters poll sees the bank announcing a cut to its asset purchases, given a recent spike in inflation.

Payments company Nexi slipped 0.8% after Italy’s competition watchdog said it had opened an investigation into the company’s planned merger with domestic rival SIA.

Spanish fund distribution firm Allfunds jumped 11.7%, and was the best performer on the STOXX 600 after its maiden first-half results beat expectations.

German exchange operator Deutsche Boerse is expected to announce new entrants to the blue-chip DAX index on Friday, part of the index’s biggest ever overhaul.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Saumyadeb Chakrabarty and Angus MacSwan)

Shares End at New Peaks, Dollar Slips on Delta Concerns

MSCI’s all-country world index climbed to its fourth straight closing high, while the Nasdaq Composite hit a fresh record close. The Euro STOXX 600 came close to breaching an all-time peak set three weeks ago and the S&P 500 almost reached a new intraday high.

The upbeat mood for equities came despite signs that Asia’s factory activity lost momentum in August and that U.S. private employers hired far fewer workers than expected last month, likely due to a resurgence in COVID-19 infections.

But the U.S. labor market continues to recover, with private payrolls increasing last month by 374,000 jobs, or 48,000 more than in July, the ADP National Employment Report showed.

U.S. manufacturing activity also unexpectedly picked up in August amid strong order growth, providing markets a sunny side to cheer.

Many investors and other market participants expect central bank stimulus measures to remain and companies to report strong earnings despite a deceleration in economic activity.

“We’re in the moment where it’s still semi-Goldilocks – there is the inflation element that is still for the moment being discarded by central bankers,” said Olivier Marciot, senior portfolio manager with Unigestion.

“Earnings are very good, macro is very strong and still the central banks are remaining very accommodative,” Marciot said.

MSCI’s all-country world index rose 0.32% to end the session at 743.67, its fourth consecutive record close, while the broad STOXX Europe 600 index closed up 0.48%.

The Nasdaq Composite advanced 0.33%, lifted by tech powerhouses such as Apple Inc, which set a new high, while the S&P 500 pared earlier gains to close up just 0.03%. The Dow Jones Industrial Average slipped 0.14%.

The dollar traded near its lowest point in nearly three weeks versus major peers as investors await the nonfarm payrolls report on Friday for clues to when the Federal Reserve begins paring its stimulus. Fed Chair Jerome Powell has said an improving labor market is a prerequisite for tapering to begin.

Worries persist, however, that the Delta variant of the coronavirus is weighing on the economy, leading some to lower their estimates for U.S. jobs data on Friday, said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

“The recovery has been uneven but if nonfarm payrolls should also disappoint, that would seemingly close the door to an imminent taper and keep the dollar in a bit of a funk,” he said.

The dollar index, which tracks the greenback versus a basket of six currencies, fell 0.14% to 92.52.

The euro rose 0.26% to $1.1838, while the yen traded up 0.02% at $110.0400.

An Institute for Supply Management (ISM) survey highlighted persistent problems securing raw materials, a situation worsened by disruptions caused by the latest COVID-19 wave, primarily in Southeast Asia, as well as ports congestion in China.

The ISM index added to skepticism that the Fed will move any time soon on tapering its bond-buying program, Manimbo said.

“It’s a vote of confidence in the Fed’s dovish stance,” he said.

Powell tried last week to distance the two concepts of the Fed tapering its bond purchases from when it begins to raise interest rates, said Kevin Flanagan, head of fixed-income strategy at WisdomTree Investments Inc.

“You have to give the Fed kudos; they’ve done a very good job with their forward guidance with respect to tapering,” Flanagan said. “They’ve met their criteria on the inflation side, and now it’s on the jobs number.”

Markets are likely to remain quiet until Friday, with an attempt by bond traders to push yields on the 10-year Treasury above the 1.32% to 1.33% level unsuccessful, he said.

The benchmark U.S. note’s yield traded flat at 1.302%.

Government bond yields across the euro area touched their highest levels in around six weeks, pushed up by unease over the future pace of European Central Bank bond purchases.

Germany’s 10-year Bund yield briefly touched its highest level in just over six weeks at -0.354% before steadying at around -0.365%.

Oil prices traded little changed after the Organization of the Petroleum Exporting Countries and its allies agreed to stick to their existing policy of gradual crude output increases.

Brent futures fell 4 cents to settle at $71.59 a barrel while U.S. crude rose 9 cents to settle at $68.59 a barrel.

U.S. gold futures settled down 0.1% at $1,816 an ounce.

(Reporting by Herbert Lash, additional reporting by Chuck Mikolajczak in New York and Tom Wilson in London; Editing by Alex Richardson, Andrew Cawthorne and Jonathan Oatis)

European Stocks Make Strong Start to September, Record High in Sight

After seven straight months of gains, the pan-European STOXX 600 rose 0.5% to end at 473.12 points, and was within striking distance of its record high of 476.16.

Retail and travel & leisure stocks were the top sectoral gainers, rising 1.8% each.

Airline SAS gained 2.4% after reporting a smaller quarterly loss as air travel gradually picked up.

Consumer-exposed sectors benefited from data that showed euro zone unemployment fell as expected in July.

Spain’s Inditex, which owns fashion brand Zara, was among the best performing retail stocks after JP Morgan forecast strong second-quarter results for the firm. The stock rose 3.1%.

A survey also showed euro zone manufacturing growth remained strong in August, but supply chain issues drove up prices and fed into inflation, which could affect monetary policy in the near term.

Investors were unsettled after data on Tuesday showed euro zone inflation surged to a 10-year-high in August, while an European Central Bank policymaker called on the bank to reduce its emergency bond purchases as soon as the next quarter.

The bloc’s banks continued to benefit from rising government bond yields.

“Elevated inflation in the U.S. and Europe, weak retail sales in Germany and a slowdown in China all suggest that the market should be factoring in a temporary slowdown in economic activity,” Sebastien Galy, senior macro strategist at Nordea Asset Management, said.

“What the market is focused on instead is that liquidity should remain very ample from the People’s Bank of China to a slow pace of tapering from the Fed and eventually one from the ECB.”

Supermarket group Carrefour was the worst performer on the STOXX 600, down 5.5% as luxury goods billionaire Bernard Arnault sold the 5.7% stake he owned in the company.

French spirits maker Pernod Ricard rose 3.7% after it posted a stronger-than-expected rise in full-year operating profit, driven by a strong rebound in demand in China and the United States.

French diagnostics specialist BioMerieux climbed 4.0% after it confirmed its full-year earnings target.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta and Mark Potter)