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Business: Stocks rise amid brighter Brexit outlook, trade tensions

TOKYO (AP) — Global stock markets mostly rose Monday as the British government appeared to turn toward a more trade-friendly version of Brexit and as investors monitored the escalating trade standoff between the U.S. and China.

KEEPING SCORE: France’s CAC 40 rose 0.5 percent to 5,402, while Germany’s DAX added 0.2 percent to 12,520. Britain’s FTSE 100 was also higher at 7,646, up 0.4 percent. U.S. shares were also set for gains, with Dow futures up 0.5 percent and S&P 500 futures gaining 0.4 percent.

BREXIT: A cabinet meeting held Friday by Prime Minister Theresa May yielded a Brexit plan that favors closer trade ties with the European Union. The plan would create a partial free trade zone, though it would mean Britain would adopt some EU rules and standards. Pro-Brexit politicians in her Conservative party have resisted such a compromise and the head of the Brexit negotiations resigned overnight Sunday. The prospect of the softer approach to Brexit saw British stocks rise and the pound gain 0.4 percent to $1.3334.

TRADE WAR: There were few developments over the weekend after Washington put a 25 percent tax on $34 billion worth of Chinese imports Friday and Beijing retaliated with taxes on an equal amount of U.S. products, including soybeans, pork and electric cars. The full impact of the measures may not be felt for some time, and there was little immediate reaction from investors who have known for weeks that the tariffs were due to take effect.

THE QUOTE: “The absence of further escalation as of yet offers Asian equity markets a further reprieve with upsides expected at the start of the week, though one would reckon the playoffs for the rest of the week remain dependent on the developments of the U.S.-China trade tensions,” said Jingyi Pan, a market strategist at IG in Singapore.

XIAOMI’S DEBUT: Chinese smartphone maker Xiaomi Corp.’s shares slipped and then rebounded Monday in its trading debut in Hong Kong following a multibillion-dollar initial public offering. Trading opened at 16.60 Hong Kong dollars, below Xiaomi’s offering price of 17 Hong Kong dollars. It fell about 4 percent in early trading but ended higher at 16.80 Hong Kong dollars ($1.98).

ASIA’S DAY: Japan’s benchmark Nikkei 225 added 1.2 percent to finish at 22,052.18. Australia’s S&P/ASX 200 edged up 0.2 percent to 6,286.00, while South Korea’s Kospi gained 0.6 percent to 2,285.80. Hong Kong’s Hang Seng rose 1.3 percent to 28,688.50, while the Shanghai Composite index jumped 2.5 percent to 2,815.11. Shares were higher in Taiwan and Southeast Asia.

ENERGY: Benchmark U.S. crude slipped 18 cents to $73.62 a barrel. It gained 86 cents to settle at $73.80 per barrel in New York late Friday. Brent crude, used to price international oils, added 65 cents to $77.76 per barrel.

CURRENCIES: The dollar fell slightly to 110.43 yen from 110.61 yen late Friday in Asia. The euro strengthened to $1.1770 from $1.1746.

___

Investing.com – Here are the top five things you need to know in financial markets on Monday, July 9:

1. Optimism Spreads Over Global Markets

Global stock markets kicked-off the week on strong footing, with shares in Asia and Europe booking solid gains as nervousness seen in the markets recently appeared to subside amid a momentary thaw in trade war rhetoric and a solid U.S. jobs report.

 

In Asia, Chinese stock markets rallied, outperforming other regional bourses. The Shanghai Composite rose roughly 2.5%, while the blue-chip CSI 300 index surged 2.8%.

Elsewhere, European shares were higher in mid-morning trade, on course to post a fifth straight advance, with most sectors in the black. Basic resources outperformed peers, up by more than 2% as trade war news took a breather.

Among national indexes, Germany’s auto-heavy DAX index inched up 0.3%, while the British blue-chip index FTSE 100 gained around 0.5%.

Markets have been on edge in recent weeks amid worries that a brewing trade war between the U.S. and its major trade partners could derail a rare period of synchronized global growth.

2. Dow Futures Up 100 Points

U.S. stock futures looked set to kick off the week on an upbeat note, as investors took a break from trade-focused worries and remained encouraged by last week’s upbeat U.S. jobs report.

At 5:40AM ET, the blue-chip Dow futures were up 110 points, or around 0.5%, the S&P 500 futures tacked on 9 points, or roughly 0.3%, while the tech-heavy Nasdaq 100 futures indicated a gain of 26 points, or about 0.4%.

The S&P 500 and the Nasdaq rose to their highest levels in two weeks on Friday, as strong U.S. jobs growth blunted the impact of an escalating U.S.-China trade dispute.

Wall Street’s second-quarter earnings season kicks off this week, with major U.S. banks JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC) all reporting Friday.

3. Dollar Slips To Lowest In Three Weeks

Away from equities, the dollar was trading at three-week lows against a currency basket, after the latest U.S. jobs report showed wages grew less than forecast in June even as the economy created more jobs than expected.

The sluggish wage growth pointed to moderate inflation pressures that dented expectations for a fourth rate hike by the Federal Reserve this year.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.3% to 93.50, the lowest level since June 14.

In the bond market, the U.S. 10-year Treasury yield inched up slightly to around 2.85%.

On the data front, the calendar is thin today, with no top-tier reports on deck.

Global financial markets will focus on this week’s U.S. consumer price data, which should give clearer signs on the pace of inflation and fresh hints on the frequency of Federal Reserve rate hikes through the end of the year.

4. Oil Prices Mixed With Supply Prospects In Focus

Oil futures were mixed to start the week, as market players continued to focus on global production levels.

Brent crude oil futures were at $77.80 per barrel, up 69 cents, or 0.9%, from their last close, while U.S. West Texas Intermediate crude futures were down 13 cents, or 0.2%, at $73.66.

Both benchmarks posted weekly declines last week amid indications of rising output from Saudi Arabia and the United States.

5. UK Brexit Secretary Unexpectedly Resigns

Brexit Secretary David Davis resigned unexpectedly Sunday night, delivering a fresh blow to Prime Minister Theresa May, as she struggles to end divisions among her ministers who felt her plan to press for the closest possible trading ties with the European Union had betrayed their desire for a clean break with the bloc.

The pound initially fell following the reports, before staging an impressive turnaround amid indications that May would not face a major backlash against her Brexit policy and hopes that a softer Brexit may be on the cards moving forward.

May appointed Dominic Raab as the new Brexit Secretary, a statement from the prime minister’s office said this morning. Raab was previously a minister for housing.

Sterling was 0.5% higher against the dollar at 1.3355 (GBP/USD), having recovered from an overnight low of 1.3284.

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