Stocks poised to drop; pound whipsawed on Brexit turmoil

Bloomberg

US stocks were poised to drop at the open as Wall Street resumes trading after the long weekend, while equities in Europe and Asia also declined as investors weighed receding chances for fresh China talks this month. Treasuries edged up, while the pound slipped against the dollar as Brexit brinkmanship raised the possibility of an early election in the UK.
Treasuries edged higher as sovereign bonds advanced across Europe, and a gauge of the dollar ratcheted up for a seventh straight session. Contracts on the three main US stock benchmarks all fell from Friday levels. Declines in energy and mining shares led the Stoxx Europe 600 index lower. Earlier in Asia, stocks fell in most of the region, though they saw modest gains in Tokyo and Shanghai. Gold held Monday’s advance.
The pound gyrated after dipping below $1.20 for the first time since 2017 following Prime Minister Boris Johnson’s threat to call a general election rather than acquiesce to parliament possibly demanding he request another postponement for the UK’s departure from the European Union.
September has begun with a rocky start for risk assets as traders remain sensitive to the twists and turns of the Sino-US trade war. With mistrust on
both sides, officials from the world’s two largest economies are struggling to agree on basic terms of re-engagement and even when to hold meetings planned for this month. Violent confrontations in Hong Kong are also weighing on sentiment.
Elsewhere, West Texas-grade crude oil slipped to $54 a barrel amid concerns an economic slowdown from the trade war may dent demand.
The US East Coast was bracing for devastating winds and a life-threatening storm surge from Hurricane Dorian as the Category 3 storm continues to wreak havoc on the Bahamas.
British members of parliament were expected to start debating an emergency plan to take control of the legislature’s business on Tuesday in London.
Bank of England Governor Mark Carney will speak before Treasury Committee on Wednesday alongside colleagues Andy Haldane, Jonathan Haskel and Gertjan Vlieghe, on the bank’s August Inflation Report; he’ll then appear alone to discuss the UK’s economic relationship with the EU. Fed speakers this week 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 the widely watched nonfarm payrolls rose by 158,000 in August, versus 164,000 the month prior. Estimates are for unemployment to be steady at 3.7 percent and the average hourly earnings rate of increase to slow to 3.0 percent.
The Stoxx Europe 600 Index sank 0.3 percent in New York. Futures on the S&P 500 Index declined 0.7 percent.
The MSCI Asia Pacific Index dipped 0.3 percent.
The Bloomberg Dollar Spot Index rose 0.1 percent. The euro sank 0.3 percent to $1.0936. The British pound fell 0.2 percent to $1.2041. The Japanese yen strengthened 0.1 percent to 106.13 per dollar. The MSCI Emerging Markets Currency Index dipped 0.3 percent.
Britain’s 10-year yield fell four basis points to 0.372 percent. The yield on 10-year Treasuries declined one basis point to 1.49 percent. The yield on two-year Treasuries dipped one basis point to 1.50 percent.
West Texas Intermediate crude declined 2 percent to $54 a barrel.