Stocks mostly flat ahead of G20; dollar slips

Tan KW

Publish date: Tue, 25 Jun 2019, 09:57 AM

NEW YORK: Global equity markets traded mostly flat on Monday as investors awaited US-China trade talks the end of this week at the G20 summit, and the dollar fell to three-month lows on bets the Federal Reserve may cut interest rates more than once this year.

European stocks stumbled on fears of an escalation in Iran tensions, which also kept gold prices near a six-year high. U.S. President Donald Trump targeted Iranian Supreme Leader Ayatollah Ali Khamenei and other Iranian senior officials with new sanctions on Monday.

Earlier in China, shares closed higher on hopes of a thaw in the U.S.-China trade dispute, which has been blamed for slowing global growth. The blue-chip CSI300 index rose 0.2%, and the Shanghai Composite Index also gained 0.2%.

Chinese state media said on Sunday that President Xi Jinping will attend the G20 summit in Osaka, Japan, in the first official confirmation of his attendance at a gathering where he is expected to meet with Trump.

On Wall Street, the S&P 500 closed slightly lower as healthcare companies lost ground. The technology-rich Nasdaq also fell while the Dow industrials edged higher.

Stocks are unlikely to push much higher without progress on U.S.-China trade or a Fed rate cut, said Rick Meckler, a partner at Cherry Lane Investments in New Vernon, New Jersey.

"Until we get that G20 meeting and start to get some feedback from the (Trump) administration, it's going to be tough to go higher," he said.

MSCI's gauge of equity performance around the globe gained 0.05%. In Europe, the FTSEurofirst 300 index of leading regional shares closed down 0.25% on weak German economic data and a profit warning from Mercedes-Benz maker Daimler.

German business morale fell in June to its lowest level since November 2014, an Ifo institute survey showed, adding weight to expectations that Europe's largest economy contracted in the second quarter. Germany's DAX index fell 0.53%.

On Wall Street, the Dow Jones Industrial Average rose 8.41 points, or 0.03%, to 26,727.54. The S&P 500 lost 5.11 points, or 0.17%, to 2,945.35, and the Nasdaq Composite dropped 26.01 points, or 0.32%, to 8,005.70.

The dollar softened against a basket of currencies on bets the Fed may lower rates more than once this year, while U.S.-Iranian tensions provided safe-haven support for the yen.

The dollar index fell 0.22% and the euro rose 0.25% to $1.1394. The Japanese yen rose 0.04% versus the greenback at 107.34 per dollar.

Interest rate futures implied traders have priced in a 100% chance the Fed will cut rates at its next policy meeting at the end of July, with a high probability for two additional rate cuts, according to CME Group's FedWatch program.

U.S. Treasury yields fell, holding just above almost three-year lows. The benchmark 10-year U.S. Treasury note rose 13/32 in price to push yields down to 2.0211%.

The glum German data pushed down bond yields across the euro zone and reinforced expectations for an ECB rate cut.

In developing markets, the Turkish lira strengthened as much as 2% after Turkey's main opposition won a re-run election in Istanbul for mayor on Sunday, a blow to President Tayyip Erdogan. The lira later pared gains.

Bitcoin pulled back from 15-month highs after jumping more than 10% over the weekend. Analysts said the gains came amid growing optimism over the adoption of cryptocurrencies after Facebook announced its Libra digital coin.

Brent crude, the international benchmark, fell on concerns about the possibility of weakening demand after large gains last week caused tensions between the United States and Iran.

Benchmark Brent crude fell 34 cents to settle at $64.86 a barrel, while U.S. crude futures rose 47 cents to settle at $57.90 a barrel.

Gold prices rose more than 1 percent to a near six-year peak as the dollar fell, with safe-haven bullion also boosted by Trump's announcement of fresh sanctions on Iran. U.S. gold futures settled up 1.3% at $1,418.20 an ounce.

- Reuters

Discussions

Be the first to like this. Showing 2 of 2 comments

ks55

President Xi - Donald Duck meeting on 28 or 29th Jun is a non-event.
Simply this Duck is not sincere, trying to shift the blame on to China as an excuse to further escalate trade war.

You will find temporary cease fire for 2 months, then this Duck (or Dick to be referred later) will go all out offensive starting with 25% tariff on additional 300 billion Chinese goods, then forbid all its allies to trade with China or at least raise tariff against Chinese goods.

Too bad the world is now divided into 2 trading blocs.
Either you trade with China, or you trade with US.

117 countries have China as biggest trading partners, whereas most developed nations heavily dependence on US.

If you choose to be on US side, you will have to forgo market for 1.4 billion population. And that is rapidly growing to be the world biggest consumer market for everything, from raw material to luxury goods........

2019-06-25 10:38

ks55

China already taking steps to reduce exposure to US bonds.

With the proceeds, China is building up gold reserve and Euros.

China also taking steps to to deal with third countries without using USD.

Can you imagine if the world trade is not in USD?
USD will fare?
The Dick (aka Donald Duck) will have to cry father cry mother how come this world is so cruel to USD.
Gold will be up to $3000 for an ounce.
USD will collapse when every central banks starting to sell USD and convert into gold or RMB........

2019-06-25 10:49

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