The Monday Market Minute
- Global stocks slide as Hong Kong protest turn violent, with police opening fire on demonstrators in the China-controlled territory.
- China data showing weakening producer prices and spiking inflation add to the gloom, clipping gains around the region.
- European stocks open weaker as US-China trade uncertainty gathers pace following weekend comments on slow progress from President Donald Trump.
- Global oil prices slide on China demand concerns, as well as data showing the lowest level of US drilling installations since April 2017.
- US equity futures retreat from record highs, with the Dow called 130 points lower ahead of a quiet session on Wall Street with bond market closed for Veteran's Day and no major economic data releases or corporate earnings expected.
Global stocks retreated from multi-month highs Monday, pulling Wall Street futures firmly into the red, as investors reacted to escalating protests in Hong Kong and expressed increasing concern that a U.S.-China trade deal could be reached by the end of the year.
Police in Hong Kong opened fire on demonstrators in the China-controlled territory on Monday, according to several media reports, wounding at least one person as protests in the region entered their fourth consecutive month. Monday's violence, which halted commuter traffic around the city's major transports hubs and shut down universities, followed the death of a twenty-two year old protestor last week and worrying signs that China could tighten its grip on the territory in order to quell the months-long disruption.
Asia stocks fell sharply amid the reports of Hong Kong violence, as well as weekend data from China showing declines in producer prices and the biggest monthly leap in consumer inflation in more than eight years. The region-wide MSCI ex-Japan index slumped 1.3% while Japan's Nikkei 225 ended the session 0.26% lower at 23,331.84 points.
U.S. equity futures were also in retreat, following last week's run of record gains for the three major Wall Street benchmarks, after comments from President Donald Trump suggested reluctance to roll back tariffs on China-made goods as part of a near-term trade agreement, a condition senior figures in Chinese media have suggested are crucial to inking any deal with Beijing.
Contracts tied to the Dow Jones Industrial Average are indicating a 140 point opening bell decline for the 30-stock benchmark, which has gained 18.66% so far this year, while those linked to the broader S&P 500 are guiding to a 14.2 point pullback from its year-to-date gain of 23.4%.
However, with bond markets closed in observance of Veteran's Day, stock market volumes are likely to be thinner than usual Monday. Earnings momentum is also likely to fade this week, with only 16 S&P 500 companies scheduled to report as the third quarter season draws to a close.
That said, with 446 S&P 500 companies reporting thus far, third quarter earnings are forecast to fall only 0.3% from last year, according to data from Refinitiv, a far cry from the 3% slide analysts' had pegged at the start of the season.
Still, Hong Kong protests and trade uncertainty will likely cast a notable pall on sentiment today, and markets in Europe are trading firmly lower across the board as a result, with the Stoxx 600 benchmark falling 0.4% in Frankfurt and Britain's FTSE 100 sliding 0.83% in London.
Away from equities, the U.S. dollar index was marked little-changed from its Friday close at 98.27, but remains within touching distance of a three-and-a-half week high against a baskets of its global currency peers as investors pile into safe-haven assets amid the Hong Kong unrest.
Global oil prices were on the back foot, as well, amid concerns for China demand growth in the wake of last week's trade uncertainty, as well as data showing an unexpected rise in U.S. crude stocks and the lowest level of Gulf of Mexico drilling installations since April 2017.
Brent crude contracts for January delivery, the global benchmark, were seen 88 cents lower from their Friday close and trading at $61.63 per barrel, while WTI contracts for December were marked 93 cents lower at $56.31 per barrel.