What you need to know:
> US and European stocks slip as trade dispute worries set jittery tone
> Chinese equities find support after $74bn injection into banking sector
> Renminbi holds near 12-month low
> Dollar ticks higher after steep losses over the previous session
> Yen gains and Japan sovereign debt yields jump on BoJ speculation
> Brent crude up as much as 2% to above $74 a barrel
“Global markets continue their malaise, as trade tensions weigh on sentiment amid fears that global growth will slow. With no major catalysts to drive the market higher, the risks are on the downside and the danger is that equity markets will drift lower” — Rebecca O’Keeffe, head of investment at Interactive Investor.
Concerns over the impact on growth of the global trade dispute are hitting European stocks, while equities in China have got some respite from a move there to address the slowing economy.
The People’s Bank of China injected $74bn into the banking system via loans to commercial banks in the latest sign that Beijing is easing monetary policy as the threat of a tit-for-tat tariff battle coincides with an economic slowdown.
The CSI 300 index of major Shanghai and Shenzhen stocks closed up 0.9 per cent, having been down by as much as 0.7 per cent. Hong Kong’s Hang Seng ticked up 0.1 per cent overall, having been off as much as 0.5 per cent.
But European stocks remain under pressure and Wall Street has opened lower. London’s FTSE 100 and Frankfurt’s Xetra Dax are both down 0.2 per cent, as is the Europe-wide Stoxx 600.
In early New York trade, the S&P 500 and the Nasdaq Composite are also both 0.2 per cent lower.
The yen is has given back early gains and the US dollar is rallying overall, while China’s renminbi currency remains around last week’s lows.
The trading pattern comes after G20 finance ministers and central bank governors, meeting in Argentina over the weekend, warned that increasing trade tension risks undermining the global economy.
Currencies and fixed income:
Japan’s currency, which often rises during times of heightened uncertainty, is flat at ¥111.34 per dollar, after strengthening almost 1 per cent on Friday.
Reuters reported on Friday that policymakers had been in “unusually active discussions” ahead of this month’s monetary policy meeting, suggesting possible changes to interest rate targets and asset-purchase programmes.
Japanese sovereign bond yields rose, with the 10-year Japanese government bond yield at one stage up 5 basis points at 0.071 per cent, nearing its highest level since February.
The yield on US 10-year Treasuries is up 5 basis points at 2.94 per cent, with the two-year just 1bp higher at 2.61 per cent — extending the yield curve steepening seen at the end of last week.
The US dollar index is ticking up 0.1 per cent after losing 0.7 per cent on Friday after President Donald Trump threatened to apply tariffs to the full $500bn range of China’s imports to the US. Its gain for 2018 stands at about 2.6 per cent.
China’s offshore renminbi exchange rate fell 0.4 per cent to Rmb6.807 per dollar, holding around the 12-month nadir it touched last week, when Rmb6.8106 was required for a unit of the US currency.
“The Chinese have already allowed their currency to devalue and may be likely to continue with this policy tool whilst the US applies more pressure as the trade war escalates.
The onshore renminbi, which moves within a trading band of 2 per cent in either direction from a midpoint, was down 0.21 per cent at Rmb6.7811.
The pound is down 0.2 per cent at $1.3107 as the dollar moves higher, with the euro 0.1 per cent softer at $1.1704.
Oil prices are rising, with Brent crude up 0.8 per cent to $73.66 a barrel — having earlier hit $74.50 — as concern about over-supply eases and after Donald Trump’s sharply worded tweet on Iran.
The global oil marker fell last week for the third time in a row and is down more than 6 per cent since the end of June.
Gold is down $6 at $1,225 an ounce.