Stocks mixed as China’s duties kick in; dollar rises

Bloomberg

European stocks climbed, US futures pared earlier declines and Asian shares were mixed after the latest China-tariff hikes kicked in. The dollar rose alongside gold.
The Stoxx Europe 600 advanced for a third straight session, led by telecom and utilities shares. Equities in Japan, Hong Kong and Australia declined in thin volumes a day after President Donald Trump’s duties on $110 billion in Chinese imports came into effect alongside China’s countermeasures. Stocks in Shanghai rose, however, as authorities vowed to support liquidity and growth. S&P 500 futures recovered most of an earlier 1.1 percent decline.
Cash Treasuries won’t trade and US equity markets will be shut for the Labor Day holiday. Treasury futures edged lower and a dollar gauge increased for the sixth consecutive day. In the UK, the pound fell and gilts rose a day before parliament re-convenes in a potential showdown over a possible no-deal Brexit, while a barometer of the country’s manufacturing dipped to its lowest level in seven years.
Investors are still reeling from a volatile August that saw a collapse in Treasury yields and declines for equities globally. Crude oil struggled for traction after its first monthly drop since May amid fears that the fading global economic growth will hurt fuel demand. And in China, a drop in the official purchasing managers’ index highlighted pressures facing the world’s second-largest economy from escalating trade tensions with the US.
Also keeping a lid on sentiment are demonstrations in Hong Kong, where a senior official said he won’t rule out imposing an emergency law in a bid to wrestle back control after protesters caused major disruptions to the city’s international airport over the weekend.
“Broad market activity and trading volume are likely to be somewhat muted,” Simon Ballard, a macro strategist at First Abu Dhabi Bank, wrote in a note. While it should mean a quiet start to the week, “the net cautious tone seems set to dominate investor sentiment,” he said.
Elsewhere, America’s southeastern coast braced for Hurricane Dorian, tied as the most powerful storm to hit land anywhere in the Atlantic, after it inflicted colossal damage to the Bahamas. Argentina’s government is imposing currency controls to halt the flight of dollars out of the country as it teeters on the brink of default. Turkey’s lira rose after data showed the economy shrank less than expected in the second quarter.
Australia sets monetary policy on Tuesday. Fed speakers include New York Fed’s John Williams on Wednesday and Fed chair Jerome Powell on Friday. The US jobs report on Friday is projected to show nonfarm payrolls rose by 158,000 in August, slightly above the month prior.
Futures on the S&P 500 Index were little changed in New York. The Stoxx Europe 600 Index climbed 0.3 percent. Germany’s DAX Index advanced 0.1 percent. The UK’s FTSE 100 Index rose 0.9 percent. The MSCI Asia Pacific Index fell 0.4 percent.
The Bloomberg Dollar Spot Index advanced 0.2 percent. The euro decreased 0.1 percent to $1.0971. The British pound sank 0.6 percent to $1.2085. The Japanese yen strengthened 0.1 percent to 106.35 per dollar. The Hong Kong dollar was little changed at 7.8426 per US dollar.
Germany’s 10-year yield advanced two basis points to -0.68 percent. Britain’s 10-year yield fell four basis points to 0.439 percent. Gold gained 0.3 percent to $1,524.93 an ounce. Brent crude fell 0.4 percent to $59 a barrel.