Traders are bracing for more market turmoil, U.S. and South Korea reach agreement on trade in the latest on tariffs, and China’s new central bank governor pledges a more open financial sector. Here are some of the things people in markets are talking about.
Bracing for Turbulence
Markets look set to be roiled further as concerns mount that U.S. protectionism will weigh on global economic growth. Futures signal further losses for Asian stocks as the week kicks off, with Japanese indexes indicating declines of about 1 percent at the start of Monday trading. The rout in global equities last week erased all of the recovery that ensued in the aftermath of the rout in early February. While that's left traders on tenterhooks, some are arguing conditions are ripe for a market rebound. JPMorgan Chase & Co. recommends being overweight equities versus bonds as market conditions look favorable going into the second quarter, even though a potential trade war is a threat to economic growth.
Latest on Trade Tariffs
The U.S. and South Korea reached an agreement on revising the allies’s six-year-old bilateral trade deal and President Donald Trump’s plan to impose tariffs on imported steel. Meanwhile, Treasury Secretary Steven Mnuchin said that the U.S. can reach an agreement with China that will forestall the need to impose the tariffs that Trump has ordered on a least $50 billion of goods from that country. A Chinese Communist Party newspaper on Saturday listed U.S. companies that’d be “most damaged” if a trade war began -- including Apple Inc., Intel Corp. and Boeing Co.
Opening China’s Financial Sector
The newly appointed governor of the People’s Bank of China, Yi Gang, said the nation will further ease access to its financial sector and coordinate the opening with currency reforms. China will open the capital account in an “orderly” way and improve the yuan’s convertibility, he said Sunday in Beijing. Yi also said that monetary policy will remain “prudent and neutral,” repeating the central bank’s recent stance, and pledged to continue work on defusing financial risks and enhancing regulatory capabilities.
China PMI and Japan industrial output are key in a light week for data in Asia. Japan's industrial production, out in Tokyo on Friday, probably rebounded in February. China PMI for March is due the following day. The official gauge surprised in February, falling to 50.3 from 51.3 in January. In the U.S, personal income and spending data for February, coupled with the Federal Reserve's favored inflation gauge, dominate the week ahead. Income and spending are forecast to grow at the same pace as January but consensus sees the core PCE deflator picking up to 1.6 percent from 1.5 percent. The final reading of fourth-quarter GDP is expected to be revised up to an annualized pace of 2.7 percent from 2.5 percent.
China Petroleum & Chemical Corp., the world’s biggest refiner, will pay a record-high dividend as its massive fuels and chemical segments helped it post a nearly 10 percent increase in full-year profit. The company proposed a 0.5 yuan per share total dividend payout for 2017, the most since its Hong Kong listing in 2000 after net income climbed to 51.2 billion yuan ($8.1 billion). While oil’s rally has helped Sinopec cut losses in its production and exploration segment, its refining and chemicals units have helped it ride out the volatility of oil’s earlier crash as margins from making fuels and petrochemicals improve.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- Stormy Daniels breaks her silence about Trump.
- Bond bulls beware: U.S. Treasury to auction about $294 billion this week.
- China said to name Guo Shuqing as PBOC party chief, NYT says.
- Uber said to agree to sell Southeast Asian business to Grab.
- Scandal clouds Japan PM’s chances of changing constitution.
- Trump tightens screws on Putin.
- The first direct Australia-U.K. flight lands.
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