The Monday Market Minute
- Global stocks sputter following another weak reading for China's manufacturing economy and reports of a White House plan to force the de-listing of Chinese stocks from US exchanges.
- The ongoing impeachment inquiry into President Donald Trump keeps risk-appetite in check, even as U.S. equity futures suggest a solid end to the quarter on Wall Street.
- US dollar index hits fresh two-year as euro slumps, investors pile into safe haven assets.
- Oil prices edge lower following weak China data and reports that Saudi Arabia has returned to full output capacity of 11.3 million barrels of oil per day.
- Wall Street futures suggest a solid start to the final trading day of the quarter on Wall Street with investors eyeing the key September jobs report later in the week.
U.S. equity futures are set to end the quarter on a high note Monday, with investors adding to solid September gains even as trade uncertainly and political turmoil continue to cast a cautious cloud over global markets.
Late Friday reports of a White House move to force the de-listing of Chinese stocks on U.S. exchanges added to broader market jitters Monday, with data from Beijing showing only a modest improvement in manufacturing activity in the world's second largest economy this month compounding concerns for a global recession.
"US capital markets are considered some of the most open markets globally," said FXTM's chief market strategist Hussein Sayed. "Any signs of restricting access to foreigners would indicate that Chinese companies may need to consider alternative options to raise capital. This gives the US a disadvantage against its competitors and will eventually lead to less financial capital inflows."
Those concerns drove investors into safe-haven assets such as the U.S. dollar and the Japanese yen overnight, while keeping gains in European markets relatively modest for much of the morning session.
The promise of a bitter partisan battle in the United States over the impeachment inquiry into allegations that President Donald Trump sought help from the Ukraine to smear Presidential candidate Joe Biden added to the broader market caution, but doesn't look to hold down gains for the final day of trading for the quarter on Wall Street.
Contracts tied to the Dow Jones Industrial Average suggest an 80 point opening bell gain for the 30-stock average, which has added just 0.83% for the quarter-to-date, while those linked to the S&P 500 suggest a 9.2 point bump higher for the broader benchmark.
European stocks were little-changed in thin volumes Monday, with the Stoxx 600 rising just 0.08% in Frankfurt as the trade-sensitive DAX index sputtered from both the soft China manufacturing data while Britain's FTSE 100 slipped 0.3% as the pound held at 1.2326 against the U.S. dollar.
Overnight in Asia, China's National Bureau of Statistics said manufacturing activity improved modestly in September, but still came in below the 50 mark that separates growth from contraction. That reading, as well as reports of the Trump Administration's delisting plans, sent shares in Shanghai 0.92% lower on the session, a move that followed a 0.56% decline for the Nikkei 225 in Tokyo.
Away from equities, the U.S. dollar index, a measure of the greenback's strength against a basket of six global currencies, rose 0.18% to a fresh two-year high of 99.43 while benchmark 10-year Treasury note yields held at 1.705%. The European single currency, meanwhile, drifted to a 28-month low of 1.0885 after reports suggested key advisers to the German government are preparing to mark down GDP growth forecasts for Europe's biggest economy.
Global oil prices extended declines as well Monday, with traders citing the weak China manufacturing data as well as reports that Saudi Arabia has restored output capacity to 11.3 million barrels per day following last week's drone attacks on the Abqaiq and Khurais facilities.
Brent crude contracts for November delivery, the global benchmark, were seen 91 cents lower from Friday's New York close to trade at $61.00 per barrel while WTI contracts for the same month, which are more tightly linked with U.S. gasoline prices, were marked 65 cents lower at $55.26 per barrel.