Asian shares traded lower this Monday with China’s property sector concerns offsetting positive data from US and news on a new drug to fight coronavirus. The trading in shares of China Evergrande was suspended pending an announcement about a major transaction. Investor sentiment was lifted on Friday on a new Merck & Co antiviral treatment for coronavirus. A host of US economic data released on Friday also showed increased consumer spending and accelerated factory activity, but also high inflation. The main focus this week will be on US Non-Farm payrolls on Friday. The employment report remains the key factor for Fed’s tapering. We also get the PMI data in Europe, UK and the US. Key speeches will be the Lagarde’s on Tuesday and BoE Ramsden’s on Monday. Ramsden comments will be closely watched for his views on the November hike in the UK. Reserve Bank of Australia meets on Tuesday and is expected to keep policy steady.
US equities were higher at the close on Friday, as gains in the oil and gas, financials and basic materials propelled shares higher. The Dow Jones Industrial Averages gained 1.43%, S&P added 1.15% and the Nasdaq Composite Index added 0.82%. The 10-year US Treasury yields stood at 1.46%, off Tuesday’s three-month high of 1.567%. The dollar found support just below last week’s peak with DXY rising 0.1% to 94.049. On Friday US labour data is expected to show continued improvement in the job market with a forecast for 460,00 jobs added in September. Powell has clearly stated that the Fed has met its tapering target for inflation, thus the employment report is the key’s factor for Fed’s tapering.
European markets have opened lower today with FTSE 100 trading 0.2% lower, CAC 40 declining 0.6% and DAX losing 0.6%. The Euro dipped back below $1.16 in not far from last week’s trough at $1.1563. Sentiment in Europe has been hit by Asia weakness with trading in Evergrande suspended. Eurozone finance ministers will meet today to discuss matters including the EU’s recovery plans and the progress of a delayed banking union project. Data published on Friday showed Eurozone inflation hit a 13-year high last month, rising 3.4% year-on-year, climbing from August’s reading of 3%. In the UK Prime Minister Boris Johnson said UK fuel crisis is now abating and he won’t revert to immigration to solve the UK’s truck driver shortage.
Asian shares dipped on Monday with MSCI’s broadest index of Asia-Pacific shares outside of Japan falling 0.3%, Japan’s Nikkei trading 1.4% lower and Hang Seng Index declining 1.9%. The concerns about China’s property sector weighed on the market, as trading in shares of Evergrande was suspended after it missed a key interest payment on its offshore debt obligation for the second time last week. Chinese mainland markets will be closed until Thursday and South Korean markets will also be shut on Monday. Today, Japan will welcome a new leader, as Fumio Kishida will be sworn as the nation’s 100th prime minister.
Oil fell this Monday with Brent Crude down 0.45% at $78.92 per barrel and WTI 0.5% lower at $75.50 per barrel. OPEC+ is scheduled to meet later today and may decide whether a recent rally in prices is sustainable. Oil prices have risen amid supply disruptions and recovering global demand, pushing Brent last week to almost three-year high above $80. OPEC+ is facing pressure to produce more to help lower prices as demand has recovered faster than expected in certain parts of the world.