Stock Slump Resumes in Asia; Oil Up, Pound Drops – MasterMind Update

On Friday a rebound in global equities saw no traction at the start of the week, with markets opening lower in Asia Monday. The pound slipped as a Brexit deal hung in the balance with just days to go until a critical deadline.

The equities in Australia, Japan and South Korea fell, following a weekend of warnings on global economic fragility from finance chiefs meeting at an annual IMF gathering. Christine Lagarde Managing Director of International Monetary Fund advised to be ready for more market volatility, speaking after the worst sell-off in global stocks since February. China’s ambassador to the U.S., in a rare American Sunday TV appearance, said his nation didn’t want a trade war but will respond.

The oil climbed amid rising tensions between the U.S. and Saudi Arabia over a missing journalist. Treasuries advanced amid the cautious tone in markets, with the yield on the 10-year benchmark slipping to 3.15 percent. The yen pushed higher alongside gold prices.

The Gloomy remarks over the weekend contrasted with the modest recovery in stocks that was staged Friday, when news on United States bank earnings helped cool anxiety that corporate profits might not live up to lofty expectations. Goldman Sachs, Morgan Stanley and Netflix are among those reporting this week. Also to come: minutes from the Federal Reserve’s latest policy meeting due on Wednesday, with investors keen to follow the debate on projections for further interest rate rises.

Nick Twidale, chief operating officer at Rakuten Securities’ Australian unit said, “It’s still a very fragile and vulnerable trading environment after after last week’s moves and some of the geopolitical risks that have risen over the weekend, e.g. Trump’s comments regarding the Saudis, have got investors on the back foot to start the week. No further progress re: U.S.-China is going to continue to weigh on sentiment.”

The pound fell as a surprise Sunday visit to Brussels by U.K. Brexit Secretary Dominic Raab failed to break the deadlock. People familiar with the situation said there were signs of progress, but officials on both sides played down the chances of an imminent agreement and denied a Politico report that a deal was done.

The United States retail sales report will give clues about consumer sentiment in September on Monday. Consensus sees healthy pick-ups in both the core and headline readings.
Finance ministers of APEC meet in Port Moresby, Papua New Guinea
China’s new yuan loans may have risen to 1.36 trillion yuan ($196 billion) in September from August’s 1.28 trillion yuan as officials sought to buoy economic growth. On Tuesday, consensus is for CPI to pick up to 2.5 percent and PPI to slow to 3.6 percent.
Third-quarter GDP for China comes Friday, with headline growth forecast to slow to 6.6 percent year on year from 6.7 percent, in addition to last month’s retail sales and factory output.

The yen ticked 0.2 percent higher to 112.02 per dollar.
The offshore yuan was at 6.9246 per dollar.
The Bloomberg Dollar Spot Index was flat after dropping 0.3 percent last week.
The euro slipped 0.1 percent to $1.1554.
The British pound fell 0.3 percent to $1.3109.

Japan’s Topix index fell 1.3 percent as of 9:47 a.m. in Tokyo.
Australia’s S&P/ASX 200 Index slid 1.5 percent.
South Korea’s Kospi index lost 0.7 percent.
Futures on the FTSE China A50 Index earlier rose 0.5 percent.
Futures on Hong Kong’s Hang Seng Index fell 0.5 percent.
Futures on the S&P 500 fell 0.3 percent. The benchmark tumbled 4.1 percent last week.

West Texas Intermediate crude rose 1.1 percent to $72.15 a barrel.
Gold rose 0.2 percent to $1,220.50 an ounce.

The yield on 10-year Treasuries ticked more than one basis point lower to below 3.15 percent after closing Friday at 3.16 percent, down about 7 basis points on the week.
Australia’s 10-year bond yield fell five basis points to 2.70 percent.