Global Stocks Slip as Trade Skirmish Drags On

Global stocks opened mostly lower on Monday, as investors continued to weigh the impact of souring U.S.-China trade negotiations.

In Europe, the Stoxx Europe 600 was down 0.2% in morning trading. In Asia, the Shanghai Stock Exchange dropped 0.4% and Hong Kong’s Hang Seng Index dropped 0.6%. Japan’s Nikkei gained 0.2%.

Futures pointed to opening gains on Wall Street of 0.2% for both the Dow Jones Industrial Average and the S&P 500.

Tensions between the U.S. and China have heated up over the past week amid tit-for-tat tariff increases from both sides, even as negotiators continued to try to thrash out a deal.

Trevor Gurwich, a senior portfolio manager at American Century Investments, said many investors have been surprised by the reemergence of tensions between the world’s two largest economies.

“The market is too sanguine about expecting a quick, easy trade deal,” he added, pointing to the complexity of the negotiations, which could cover issues like intellectual property law.

At this stage, the main issue is gauging the impact of fresh uncertainty on the global economy through weakened sentiment and via financial markets, according to Marco Valli, head of macro research at UniCredit, rather than the direct impact of lower global trade.

The 10-year U.S. Treasury yield on Monday ticked up to 2.405%, from 2.396% on Friday. Yields move inversely to prices. German 10-year government bonds were in negative territory at -0.096%.

The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was down 0.1%.

Meanwhile, India’s benchmark Sensex equities index was up 2.9% and the rupee gained 1.1% on the dollar after exit polls released on Sunday showed Prime Minister Narendra Modi is likely to return for another five years at the helm of the world’s second most populous nation.

In Australia, the benchmark ASX 200 index gained 1.7% after a surprise win for the conservative government. The Australian dollar was up 0.9% on the U.S. dollar.

This week, investors will be watching for data on U.S. home sales and eurozone purchasing managers surveys on Thursday.

In commodities, global benchmark Brent crude oil was up 1.3% at $73.18 per barrel.
Source: Dow Jones