Scion Industrial Engineering

Stocks Decline Before G-20; Treasuries Edge Higher

US equity futures dropped with European stocks as investors count down to a meeting between the American and Chinese presidents that could decide the course of the trade war. Benchmark Treasury yields fell and the dollar gained.

Carmakers and banks led a retreat in the Stoxx Europe 600 Index, while futures for all three major US indexes slid amid lingering doubts over the prospects for a thaw in relations between Presidents Donald Trump and Xi Jinping. Shares gained in Tokyo, slipped in Seoul and fell in Sydney, with Shanghai and Hong Kong stocks rising even after data showed that China’s economy remains in a weak patch. WTI crude dropped below $51 a barrel, on track for the biggest monthly slump in a decade. The euro weakened after data showed inflation in the common-currency region easing.

Trump, who is meeting Xi over dinner on Saturday, said on Thursday he’s very close to “doing something” with China as officials work on the contours of a deal that may delay ramping up tariffs on the Asian country in January. Any sign of a trade truce could take the edge off a rampant greenback and boost risk assets including emerging-market currencies and stocks. Goldman Sachs, however, said an escalation of tensions is the most likely outcome.

“I wouldn’t be surprised at the end of this weekend if the US and China didn’t announce a concord that basically sat down a path to help resolve the trade frictions,” Scott Minerd, chief investment officer at Guggenheim Partners, told Bloomberg TV in Tokyo. “I don’t think that out of the meeting there’s going to come much substance, but there will be a sort of set of principles that will be established to start the process of bringing an end to the trade war.” His firm manages about $265bn.

The best-case scenario: what the Trump-Xi dinner could yield

The first official gauge of China’s economy in November showed manufacturing activity continued to worsen, indicating the authorities will need to keep using stimulus measures as economic growth slows. On Thursday in the US, minutes from the Federal Reserve’s last policy meeting showed the central bank preparing for a more flexible path in 2019.

Elsewhere, Korea’s won held on to this week’s losses as Friday’s interest rate increase did little to assuage concern surrounding the economy. The pound remained under pressure, drifting downward as UK Prime Minister Theresa May continued efforts to win backers for her Brexit deal. Emerging-market equities and currencies dipped.

Coming Up

Trump and Chinese President Xi Jinping will meet at the G-20 summit of world leaders in Argentina that kicks off on Friday. Russia’s Vladimir Putin and Saudi Arabia’s Mohammed bin Salman are likely to discuss oil policy. Ford, Fiat Chrysler, other automakers report November US sales on Monday. New York Fed President John Williams speaks at an event on Friday. Fed Chairman Jerome Powell testifies on the economic outlook before Congress’s Joint Economic Committee next Wednesday.

These are the main moves in markets:

Stocks
The Stoxx Europe 600 Index sank 0.5% as of 07:02 New York time. Futures on the S&P 500 Index dipped 0.5%, the first retreat in a week. The MSCI All-Country World Index declined 0.2%. The MSCI Emerging Market Index fell 0.3%.

Currencies
The Bloomberg Dollar Spot Index advanced 0.2%, the largest gain in a week. The euro decreased 0.2% to $1.1368. The British pound dipped 0.3% to $1.2755. The Japanese yen declined less than 0.05% to 113.49/$.

Bonds
The yield on 10-year Treasuries decreased two basis points to 3.01%, the lowest in more than 10 weeks. Germany’s 10-year yield fell one basis point to 0.31%. Britain’s 10-year yield fell two basis points to 1.344%, the lowest in more than three months. Japan’s 10-year yield jumped one basis point to 0.092%.

Commodities
West Texas Intermediate crude decreased 1.8% to $50.53 a barrel. Gold declined 0.1% to $1 222.41 an ounce. Copper fell 0.4% to $2.78 a pound.

Source:https://www.fin24.com/Markets/International-Markets/stocks-decline-before-g-20-treasuries-edge-higher-20181130