By Lorcan Roche Kelly
Setting a date
Chinese and U.S. officials are having difficulty agreeing a date for the next round of trade talks after Washington rejected Beijing’s request to delay tariffs that took effect over the weekend. Authorities in the Asian nation said they planned to file a complaint at the World Trade Organization against the U.S. moves. The fallout from the prolonged trade war is biting deeper into global factory production, with manufacturing PMIs from across the world yesterday showing increasing weakness. Although not everyone is gloomy on the outlook: Veteran market strategist David Woo says now is the time to bet on a deal.
Parliament returns for its first post-holiday sitting today in London, and it looks like it’s going to be a very interesting one. A cross-party group is hoping to introduce a draft law which would force Prime Minister Boris Johnson to delay Brexit if he can’t broker a new deal with the EU by the current Oct. 31 deadline. Johnson reacted to the threat by saying he would rather have an election than see his negotiating position with Europe undermined. Sterling dropped to $1.1959 this morning, the lowest level since 2016, as the uncertainty takes its toll.
The Bahamas continues to bear the brunt of the very slow-moving Hurricane Dorian, with the storm dropping to category 3 as it inches its way toward the U.S. mainland. Weather forecasters are currently painting a picture of Dorian grazing the coast as it moves up through Florida, Georgia and the Carolinas, with residents living near the sea told to evacuate. Despite the storm not now expected to make a direct hit on the mainland, the sheer size of the weather system has already caused massive numbers of flight cancellations, with insured losses from the event expected to hit at least $25 billion, according to UBS Group AG calculations.
Overnight the MSCI Asia Pacific Index slipped 0.3% while Japan’s Topix index closed 0.4% higher as the market there showed it’s becoming more resilient to U.S.-China headlines. In Europe, the Stoxx 600 Index was 0.4% lower at 5:50 a.m. Eastern Time with London’s FTSE 100 Index falling despite the drop in the pound. S&P 500 futures pointed to a sharp drop at the start of the holiday-shortened week in the U.S., the 10-year Treasury yield was at 1.476% and gold was higher.
Investors will get a look at the strength of U.S. factories today with August Markit Manufacturing PMI published at 9:45 a.m. and ISM Manufacturing released 15 minutes later. 10:00 a.m. also sees construction spending data for July. In monetary policy, Boston Fed President Eric Rosengren speaks and Chile’s central bank announces its rate decision.