By Lorcan Roche Kelly
President Xi Jinping reiterated China’s commitment to the global trading order in a keynote speech in Shanghai where he said the country will “continue to lower tariffs and institutional transaction costs.” He didn’t mention the current trade negotiations with the U.S. or President Donald Trump in his remarks. Those negotiations are continuing, with optimism increasing over a phase-one deal that might be ready for signatures in the coming weeks. Also in China, the central bank reduced the cost of one-year funds for banks in an effort to calm nerves about tightening liquidity. The yuan traded past 7 per dollar for the first time since August.
Potential investors in Saudi Aramco’s long-awaited IPO got something else to factor into their calculations this morning when OPEC slashed its estimates for the amount of oil it will need to pump in the coming years. The producer group expects demand for its crude to slide by about 7% over the next four years amid a flood of U.S. shale supplies. This could compel members, including Saudi Arabia, to reduce output even further from already agreed levels. In the market, crude remained steady as the recent rise on the back of trade optimism held.
The Securities and Exchange Commission announced that American securities firms will get a further three-year reprieve from Europe’s tough investment research rules, saying it needs additional time to evaluate the measures. Relief granted from the rules in 2017 was due to expire in July of next year, so Wall Street banks now have a pass until 2023. Some brokerages have been in favor of adopting European rules in the U.S. as maintaining two separate business models is proving costly.
Overnight the MSCI Asia Pacific Index climbed 0.9%, while Japan’s Topix index closed 1.7% higher as trade optimism dominated the gauge’s first trading session of the week. Europe’s Stoxx 600 Index was 0.1% higher at 5:50 a.m. Eastern Time as stocks in the region held on to yesterday’s rally held. U.S. stock futures point to further record highs at the open, the 10-year Treasury yield was at 1.812% and gold slipped.
The U.S. September trade balance is published at 8:30 a.m. October services and composite PMI is at 9:45 a.m., with ISM non-manufacturing at 10:00 a.m. Today’s Federal Reserve speakers are Richmond Fed President Thomas Barkin, Dallas Fed President Robert Kaplan and Minneapolis Fed President Neel Kashkari. Allergan Plc, Mylan NV and Newmont Goldcorp Corp are among the companies reporting earnings.