The Monday Market Minute
- Global stocks extend declines as trade tensions, slowing growth and a weaker U.S. dollar add to investor concerns heading into the final weeks of the year.
- Asia shares slump as Japan’s Q3 GDP is revised sharply lower and China’s November exports screech to a halt as global trade slows amid U.S. tariffs threats.
- European stocks open weaker as tensions related to French protests, German leadership, Italy’s budget and Britain’s Brexit vote keep investors sidelined
- U.S. stocks look set to extend last week’s sharp declines, with Dow futures indicating another triple-digit decline
Global stocks extended declines Monday as investors continued to express concern over the fate of U.S.-China trade talks while noting slowing growth from two of the world’s biggest exporters and rising geopolitical risks in Europe heading into the final trading weeks of the year.
U.S. Trade Representative Robert Lighthizer told CBS’s ‘Face the Nation’ Sunday that trade talks with China must be completed by March 1 or tariffs will be either accelerated or added on China-made goods coming into the United States.
“As far as I am concerned it is a hard deadline. When I talk to the president of the United States he is not talking about going beyond March,” he said. “The way this is set up is that at the end of 90 days, these tariffs will be raised.”
The deadline puts added pressure on negotiators to set the tone of the talks, which have already been affected by the shock arrest last week of Huawei Technologies CFO Meng Wanzhou in Vancouver over allegations she helped a company, as well as U.S. banks, do business with Iran in violation of U.S. and Canadian sanctions.
The arrest added to trade tensions that are already gaining more importance for global investors as increasing signs of an economic slowdown seep into data from some of the world’s biggest markets. Japan’s revised third quarter GDP data showed the economy contracted by a more-than-expected 2.5%, the worst in more than four years, while China’a November exports nearly ground to a halt, rising only 5.4% from the same period last year.
Asia shares tumbled on the collective news, with the Nikkei 225 sliding 2.11% to a six-week low of 21,519.50 points as the MSCI Asia ex-Japan index slumped 1.61%.
Early indications from U.S. equity futures suggest Wall Street will follow suit, with contracts tied to the Dow Jones Industrial Average marked for a 72-point opening bell decline and those linked to the broader S&P 500 suggesting an 8.8 point pullback at the start of trading.
European stocks were also weaker at the opening bell, with the Stoxx Europe 600 benchmark falling 0.77% and Britain’s FTSE 100 sliding 0.3%.
The U.S. dollar index, which benchmarks the greenback against a basket of six global currencies, slipped 0.4% in overnight trading to 96.486 as investors re-priced bets on 2019 rate hikes from the Federal Reserve following a weaker-than-expected reading of U.S. employment last month, which showed the economy added a net new 155,000 jobs over the month of November and wage growth stalled at 3.1%.
Global oil prices were modestly higher in early European trading hours, following Friday’s surge that lifted both Brent and WTI crude as much as 5% higher on the session after OPEC members and allies such as Russia agreed to cut production by 1.2 million barrels per day for at least six months in order to address what they see as a global supply glut.
Prices were given further support Monday by news of a pipeline outage in Libya and data from China’s customs office which showed crude imports topped the 10 million barrel per day mark for the first time on record last month, suggesting U.S.-issued waivers on the sale of Iranian crude allowed the country to keep buying oil despite State Department sanctions.
Brent crude contracts for February delivery, the global benchmark, were marked 9 cents higher from their Friday close in New York and changing hands at $61.76 per barrel while WTI contracts for January delivery, which are more tightly liked to U.S gas prices, were marked 18 cents lower at $52.43 per barrel.