Stocks meander on caution over trade talks, dollar gains

The dollar index rose 0.23 per cent, with the euro down 0.15 per cent to US$1.1023. — Reuters pic
The dollar index rose 0.23 per cent, with the euro down 0.15 per cent to US$1.1023. — Reuters pic

NEW YORK, Oct 15 — The US dollar gained yesterday as optimism ebbed over a potential US-China trade deal that President Donald Trump outlined last week, while a gauge of global equity markets was little changed as investors sought details about an agreement.

Gold gained and oil prices fell more than 3 per cent at one point as scant information about the first phase of a Sino-US trade deal undercut optimism over a thaw in the dispute that has sparked a slowdown in global growth.

A slide in Chinese exports picked up pace in September while imports contracted for a fifth straight month, evidence of further weakness in China’s economy as tariffs take their toll.

China’s exports fell 3.2 per cent from a year earlier in September, the biggest fall since February, customs data showed.

MSCI’s gauge of stocks across the globe shed 0.12 per cent while the FTSEurofirst 300 index of leading regional shares closed down 0.45 per cent.

Stocks closed lower on Wall Street after trading on either side of break-even during the session.

The Dow Jones Industrial Average fell 29.23 points, or 0.11 per cent, to 26,787.36. The S&P 500 lost 4.12 points, or 0.14 per cent, to 2,966.15 and the Nasdaq Composite dropped 8.39 points, or 0.1 per cent, to 8,048.65.

“You’re pivoting from what was trade escalation in August and parts of September to trade de-escalation which markets celebrated at the end of last week,” said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.

“Now moving forward it’s going to be about what exactly has been agreed to?”

Investors are awaiting more details on trade negotiations, talks over Britain’s departure from European Union and the release starting later this week of third-quarter earnings results, Arone said.

“I expect 2020 expectations to continue to be lowered and that could be a challenge to the market moving forward,” he said.

The US benchmark S&P 500 ended Friday with its first weekly gain in a month after Trump signaled that Washington and Beijing had taken the first major step in easing tit-for-tat tariff measures.

Euro zone bond yields fell as caution regarding the trade talks encouraged investors back into fixed income after a hefty sell-off on Friday that sent borrowing costs to 2-1/2 month highs.

Trading in US Treasuries was closed for the Columbus Day holiday.

Earlier in Asia, stock markets cheered news of a trade agreement. China’s blue-chip CSI300 index gained 1.1 per cent while the Shanghai Composite Index rose 1.2 per cent.

Markets in Tokyo were closed.

The greenback, Swiss franc and Japanese yen all weakened as optimism over the trade talks, together with the European Union and Britain restarting Brexit negotiations, encouraged investors into riskier assets.

The dollar index rose 0.23 per cent, with the euro down 0.15 per cent to US$1.1023 (RM4.62). The Japanese yen strengthened 0.02 per cent versus the greenback at 108.40 per dollar.

Sterling fell 0.74 per cent to US$1.2554, retreating from a 15-week high of US$1.2708 on Friday, on optimism Britain could reach a deal on Brexit with the EU.

A Brexit deal was hanging in the balance after diplomats indicated the EU wanted more concessions from Prime Minister Boris Johnson and that a full agreement was unlikely this week.

Oil futures fell about 2 per cent, paring bigger losses earlier.

Brent crude dropped US$1.16 to settle at US$59.35 a barrel, while US West Texas Intermediate (WTI) crude settled down US$1.11 to US$53.59 a barrel.

US gold futures settled 0.6 per cent higher at US$1,497.6 an ounce. — Reuters

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