By Wayne Cole
SYDNEY (Reuters) – Asian stocks slipped on Monday as markets anxiously plunged to a likely cut in US interest rates this week with much riding on about Federal Reserve signals are even more ongoing.
Futures for the pan region and Germany were about 0.2% in early deals, although London futures were a shade higher.
E-Mines for dipped 0.1
The U.S. and Chinese trade negotiators also meet in Shanghai this week for the first personal talks since a G20 ceasefire last month, but expectations are low for a breakthrough.
Data over the weekend showed profits made by China's industrial companies entered into in June, driving concern that the blue trade war will lead to economic growth.
"We are cautiously optimistic that both sides can agree on a narrow deal that addresses important trade-related issues, such as the US demand to increase exports," said analysts at Barclays (LON 🙂 in a note.
"That said, we are skeptical of the prospect of a broader agreement that includes the more challenging security-related issues."
MSCI's broadest index of Asia and Pacific equities outside Japan fell 0.6% in slow trading. Japan dipped 0.2% and Shanghai blue chips 0.1%.
The interest rate futures are fully priced for a quarter-point rate from the Fed on Wednesday, with only a small chance of a half-point move.
More important will be what the central bank flags for the future, given the market involves 100 basis points to facilitate the next year or so.
"The announcement will be central and will help markets decide whether the interest rate cut is just an" insurance cut, "or the Fed is embarking on a full easing cycle that the market is currently pricing in," said Tapas Strickland, CFO at NAB.
He noted the solid reading on US economic growth in the second quarter last week, supporting the Fed by arguing for just one or two cuts.
"The US economy is still the least dirty t-shirt in the global laundry basket. The dollar was stronger across the board in response," Strickland said.
The dollar hit a two-month high on a currency basket of 98.010, and last traded at 98.023.
The euro stood at $ 1.1125 on Monday, just over last week's two-year trough around $ 1.1102, while the dollar fell back to 108.62 yen.
The dollar had received a helping hand from White House economic adviser Larry Kudlow, who on Friday said the Trump administration had "ruled out" intervening to push it lower.
Sterling was pegged near the low-monthly level of around $ 1.2375, among government reports to Prime Minister Boris Johnson preparing the ground for a "no-deal" Brexit.
was flat at $ 1,418.00 per ounce.
Oil prices drove down early trade pressure from the usual concerns of oversupply and slowing demand in the world.
futures eased 33 cents to $ 63.13 while losing 17 cents to $ 56.03 per barrel.
Fusion Media or anyone involved in Fusion Media will not be liable for any loss or damage as a result of the information including the data, offers, charts and purchase / sale of signals on this site. Be fully informed about the risks and costs associated with trading in the financial markets, it is one of the most risky forms of investment possible.