What you need to know:
> China stocks knocked as Kudlow signals that US-China trade talks are stalled
> European bourses drift in cautious opening trade after mixed run of earnings news
> Renminbi near one-year low while dollar holds around 2018 high
China’s stock indices are lower and European stocks are trading cautiously as investors measure comments from the White House signalling that trade talks between Washington and Beijing are stalled.
The CSI 300 index of major Shanghai and Shenzhen stocks is down 0.2 per cent, fading from opening gains of 0.6 per cent. In Hong Kong, the Hang Seng China Enterprises index was up 0.9 per cent before moving lower to be up 0.2 per cent on the day.
The broader Hang Seng index in Hong Kong is also losing momentum, down 0.1 per cent overall and off earlier gains of 0.6 per cent.
China’s currency has slipped to near a one-year low and the dollar is steadier, after comments from the Federal Reserve chairman overnight. An upbeat Jay Powell reassured the market over prospects for the domestic US economy and underpinned expectations for interest rate rises.
The renminbi’s onshore exchange rate, which is permitted to move within a trading band of 2 per cent in either direction, is down 0.3 per cent to Rmb6.7398 per dollar, its lowest since late July last year.
The trading pattern comes after US National Economic Council director Larry Kudlow suggested that China could “end” the “tit-for-tat business” immediately by reducing tariffs and allowing American ownership of companies in China.
Mr Kudlow told CNBC’s Delivering Alpha conference that Chinese President Xi Jinping “does not wish to make a deal”.
London’s FTSE 100 is ticking up 0.1 per cent, with Frankfurt’s Xetra Dax 30 down 0.3 per cent, while the Europe-wide Stoxx 600 is flat.
Earnings season continues with half-year results from Unilever, after which the Anglo-Dutch consumer goods group’s shares are down 0.6 per cent. ABB, the Swiss engineer, is up 4 per cent after its second-quarter profits beat forecasts.
In Sydney, the S&P/ASX 200 is up 0.5 per cent despite downward moves from utilities and telecommunications stocks. And Tokyo’s Topix was also flat after rising 0.5 per cent, led by early gains for energy and technology stocks.
The moves also came after strong earnings from Morgan Stanley boosted the S&P 500 financial sector to a gain 1.3 per cent on Wall Street overnight while the tech-heavy Nasdaq Composite ended fractionally lower.
Australia’s dollar is up 0.3 per cent at $0.742 after jobs data exceeded forecasts and the country’s unemployment rate dropped to a five-year low.
The yen, which slipped past the ¥113 mark to a six-month low on Wednesday, was a touch firmer at ¥112.72. The New Zealand currency was 0.1 per cent weaker against the dollar at $0.6783.
In the sovereign debt market, the US 10-year Treasury yield, which moves inversely to price, was up 2 basis points at 2.884 per cent. Yield on the Australian note was also 3bp higher at 2.66 per cent and the Japanese equivalent was flat at 0.031 per cent.
Oil prices were steady with Brent crude down 0.2 per cent at $72.75 a barrel while West Texas Intermediate was unchanged at $68.75 a barrel.