Asian and European stock markets mostly lower overnight. U.S. stock indexes are pointed toward solidly lower openings when the New York day session begins. Risk aversion is back in the marketplace early this week, amid geopolitical matters that continue to simmer.
China over the weekend filed a complaint with the World Trade Organization against the U.S. and its tariffs imposed on China. This move appears to ratchet up the trade war between the world’s two largest economies. The Chinese yuan dropped to an 11-year low against the U.S. dollar overnight, at near 7.2 to the dollar. The weaker yuan makes Chinese goods less expensive in U.S. dollar terms.
Civil unrest continues high in Hong Kong after another weekend of protesting. Reports said Hong Kong authorities are now considering declaring a state of emergency.
The British pound fell to a 34-year low against the greenback today amid turmoil in the U.K. over the British exit from the European Union (Brexit). The U.K. is presently set to leave the EU in October. New Prime Minister Boris Johnson is battling with his own party on the matter, as Johnson wants out of the EU in October, with no more extensions to negotiate a “soft” Brexit.
Meantime, Australia’s central bank held its interest rates steady today at its regular monetary policy meeting, but said future interest rate cuts could occur.
The key “outside markets” today see Nymex crude oil prices down and trading around $54.25 a barrel. The U.S. dollar index is solidly higher and hit a 27-month high overnight.
U.S. economic data due for release Tuesday includes the U.S. manufacturing purchasing managers’ index (PMI), the ISM manufacturing report on business, the IDB/TIPP economic optimism index, the global manufacturing PMI, and construction spending.
–Jim
