Asian Markets Smell Fear After G7 Summit And Japanese Trade Balance Numbers
The G7 Summit took place over the weekend, with leaders reiterating the importance of refraining from competitive devaluation of currencies. Prior to this, rumors swirled that the Bank of Japan was gearing up to end its quantitative easing program as the central set aside a part of its reserves in anticipation of huge losses on its holdings of government bonds.
The Nikkei is down 163.94 points to 16,572.41 (-0.99%) and futures are lower by 167.5 points (-1.00%). Data from Japan was weaker than expected, as the flash manufacturing PMI fell from 48.2 to 47.6 to indicate a sharper pace of industry contraction. The All Industries Activity index is due next and a 0.7% rebound is eyed, although traders appear to be more focused on potential central bank action.
European markets shaping up for PMI improvements?
European futures are in the green, with investors presumably positioning for improvements in the flash PMI readings from the manufacturing and services sectors of Germany and France. German DAX futures are up 15.8 points to 9,932.9 (+0.16%), French CAC 40 futures are up 63.0 points to 4,297.0 (+1.49%), and Euro Stoxx 50 futures are up 37.0 points to 2,933.0 (+1.28%).
In the UK, FTSE 100 futures are up 12.5 points to 6,146.0 (+0.20%) after the stock index closed 102.97 points up to 6,156.32 (+1.70%) on Friday. Opinion polls showing a growing lead in favor of avoiding a Brexit have supported UK stocks, although the British currency returned some of its gains to its counterparts before the weekend.
US futures and equities post feeble gains
US markets rounded up another set of gains on Friday, as traders likely booked profits off their short positions earlier in the week. Dow 30 index futures are up 29 points (+0.17%), S&P 500 index futures are up 3.25 points (+0.16%), and Nasdaq futures are up 10.13 points (+0.24%).
The S&P 500 VIX, which is considered a gauge of market uncertainty, edged 1.13 points down to 15.20 (-6.92%) on Friday to indicate the presence of risk appetite. Still, financial market watchers appear to be on edge ahead of this week’s top-tier market catalysts (Bank of England Inflation Report hearings, Bank of Canada interest rate decision) and US earnings releases from HP and Lenovo. Last week, earnings reports from Target, Cisco, and Lowe’s beat expectations, reviving investor confidence in the US corporate sector.