Market movers today
After better-than-expected Chinese and euro area data triggered a sell-off in global bond markets on Friday, markets will pay close attention to a range of sentiment indicators released on both sides of the Atlantic later this week.
But today we start the week in a somewhat quiet fashion , with the US Empire Manufacturing index the only data release of interest. The US manufacturing sector has not been immune to the global slowdown and we will look to see whether the April figure points to any trend reversal.
On the political front, EU ministers are expected to vote today on approving the negotiating mandate for the Commission to start trade talks with the US . With cracks in the EU’s united front not only showing with regard to the Brexit strategy, focus will be on whether France openly opposes the start of the negotiations.
Selected market news
Equities in Asia saw a brisk opening, following good earnings news from the US, where the S&P 500 index climbed over the 2,900 level for the first time since early October 2018. Positive export and bank loan data from China last week and optimism on the oncoming China-US deal are also supporting the risk-on sentiment. On Saturday, US Treasury Secretary Steven Mnuchin declared a China-US trade agreement would go “way beyond” previous efforts to open China’s markets to US companies hoping that the two countries were “close to the final round” of negotiations.
Reuters wrote that US negotiators have tempered demands that China curb industrial subsidies as a condition for a trade deal after strong resistance from Beijing. In the push to secure a deal in the next month or so, US negotiators have become resigned to securing less than they would like on curbing those subsidies and are focused instead on other areas where they consider demands are more achievable.
On Monday, the US starts trade talks with Japan. Mnuchin wants a currency clause to stop manipulation of the JPY to support exports.
US President Donald Trump criticised the Fed, tweeting that if the Fed had done its job properly the stock market ‘would have been up 5,000 to 10,000 additional points, and GDP would have been well over 4% instead of 3% with almost no inflation’, blaming quantitative tightening. ECB chief Mario Draghi said he was worried about central bank independence, especially in “the most important jurisdiction in the world”, thus criticising Trump. Central bank independence was a key part of IMF meetings in Washington over the weekend.
