Monday, 11 November 2019

Global stocks drop as Hong Kong violence rattles investors

LONDON (Reuters) - Shares around the globe fell on Monday, buffeted by escalating violence in Hong Kong that pushed Asian stocks to their worst day since August and stoked demand for the safe-haven yen and gold.

In the 24th straight week of pro-democracy unrest, Hong Kong police shot and wounded a protester as the Chinese-ruled territory saw rare working-hours violence.

The MSCI world equity index, which tracks shares in 47 countries, slipped 0.2%, with Hong Kong's Hang Seng index .HSI falling 2.6% and leading losses across Asia.

There, MSCI's widest index of Asia-Pacific shares outside Japan fell 1.2% from six-month highs to set a course for its worst day since late August. Chinese blue chips .CSI300 dropped 1.8%.

The nerves spread to Europe, too.

The broad Euro STOXX 600 fell 0.4%, with London shares .FTSE losing 1.1%. Wall Street futures gauges also suffered, suggesting losses of around 0.4%.

Some investors said markets could be affected by any further escalation of the violence in Hong Kong, where protesters are angry about what they see as police brutality and meddling by Beijing in the freedoms guaranteed to the former British colony.

“At some stage I think it is likely that there will be a more fully-fledged crackdown,” said St├ęphane Barbier de la Serre, a strategist at Makor Capital Markets.

“And if you see a crackdown, you could see markets collapsing.”

The violence sent investors running for assets perceived as safe havens and away from riskier currencies.

Gold rose 0.5%, rebounding from a three-month low touched on Friday to reach $1,465.36 per ounce.

The Japanese yen , which often strengthens in times of global political or economic turmoil, strengthened 0.3% against the dollar. China's yuan, in contrast, weakened 0.3% to 7 per dollar in offshore trade CNH=EBS.

Sterling GBP=D3 gained 0.3% against the dollar after figures showed that Britain's economy had dodged a recession - but grown at its slowest annual pace in almost 10 years.

It was last trading at $1.28.

The GDP data compounded a warning from Moody’s on Friday that it might cut its rating on Britain’s sovereign debt again, as it lowered the outlook on Britain’s current rating to negative from stable.

Investors were also focused on the U.S-China trade talks.

After a bout of optimism last week over prospects that Washington and Beijing could reach an initial deal to alleviate their 18-month old dispute, doubts gnawed at markets again.

On Saturday, U.S. President Donald Trump said talks had moved more slowly than he would have liked. He said reports that the United States was willing to lift tariffs were incorrect, adding that Beijing wanted a deal more than he did.

Slideshow (2 Images)
Still, some market players said Trump’s comments fitted an established pattern of optimistic rhetoric being followed by a more skeptical tone.

A deal was still likely, they said.

“It’s the usual two steps forward and one step backwards,” said Adam Cole, head of FX strategy at RBC Capital Markets.

“We are probably still moving in the direction (of a deal), and that’s the way the market is priced on balance.”

The uncertainty over trade weighed on commodities markets commodities.

Oil lost 1.3%, with concerns over trade and worries about oversupply weighed on the market. Brent crude was down 82 cents to $61.88 by late morning.

In Europe, Spanish government bond yields held their ground after a weekend election delivered a fractured parliament and set the stage for difficult talks to form a ruling coalition.

The far-right surged in the poll, the fourth in as many years. Spain’s 10-year bond yield was flat at 0.40%.

Most other major bond yields across the euro zone were little changed, holding below highs reached on Friday as investors showed scant appetite for risk in the wake of the Hong Kong violence.

U.S. bond markets were closed for the Veteran’s Day holiday.

Reporting by Tom Wilson

Sunday, 10 November 2019

Politics for the weekend- UK accused of withholding report on Russian meddling to spare embarrassment

LONDON (Reuters) - The British government was accused by opponents of sitting on a parliamentary report examining alleged Russian meddling in British politics because it might contain embarrassing revelations about Prime Minister Boris Johnson and his party.

The report by parliament’s Intelligence and Security Committee (ISC) has been cleared by the security services but it has not yet been given approval for publication by Johnson’s Downing Street office, meaning it cannot be released before a Dec. 12 election.

Britain has accused Russia of meddling or trying to interfere in western elections, accusations denied by Moscow. The ISC was examining allegations of Russian activity aimed at the United Kingdom, including in the 2016 referendum on EU membership, when Johnson was a leading campaigner to leave.

Emily Thornberry, the foreign affairs spokeswoman for the opposition Labour Party, said the decision not to publish the parliamentary committee’s report was for “utterly unjustifiable, unprecedented and clearly politically-motivated reasons”.

“What is Downing Street so worried about? I fear it is because they realize this report will lead to other questions to about the links between Russia and Brexit,” she told parliament.

She said questions might be raised about Johnson’s relationship to a suspected Russian spy who described the prime minister as a “good friend”.

The report might also raise questions about connections of Johnson’s senior aide Dominic Cummings, who worked in Russia in the 1990s, and about money from Russian sources to Johnson’s Conservative Party, she said.

Junior foreign office minister Christopher Pincher accused Thornberry and others of peddling reprehensible smears and conspiracy theories for party political reasons ahead of the election.

He said the reason the report had not been published was because Johnson had a responsibility to study it carefully.

“It is not unusual for a review of ISC reports to take some time,” Pincher said. “The turnaround time for this report is not unusual, the response time to the committee is not unusual.”

The ISC’s chairman, Dominic Grieve, a lawmaker pushed out of the parliamentary bloc of Johnson’s Conservatives over Brexit, said that the report might not now be published until six months after parliament had been reformed following the election.

“My secretariat tell me that it is unprecedented that we should have had no response at all explaining why any further delay is required in this case,” he told parliament.

The report, he said, had been scrutinized by Britain’s intelligence agencies who had cleared it for publication last month. It was passed to Johnson’s office on Oct. 17.

“For what purpose is the prime minister still considering it? It certainly can’t be the risk to national security because the agencies themselves said there is none,” Grieve said.

Reporting by Guy Faulconbridge and Michael Holden

Friday, 8 November 2019

Golden Retrievers and Husky Welcomes Tiny Baby Kittens

Just for fun.

Look at this.

Sterling holds above $1.28, unchanged as investors wait for political moves

(Reuters) - Sterling was little changed on Friday, holding just above $1.28 and recovering from two-week lows against the dollar and euro, as investors await political developments ahead of Britain’s Dec. 12 election.

The pound was pushed to a low of $1.2794 on Thursday when the Bank of England’s decision to keep rates constant was not unanimous as had been expected.

Two out of nine officials voted to cut interest rates this month and others said they would consider a cut if global and Brexit headwinds did not lift.

The pound recovered from Thursday’s losses, up slightly versus the dollar at $1.2819 but overall down by around 1% since the start of the week.

Versus the euro, the pound strengthened around 0.1% at 86.18 pence.

The Bank of England meeting’s surprisingly dovish outcome did not make a lasting impression on the pound, Commerzbank FX strategist Thu Lan Nguyen said.

“It just shows that the market is largely concentrated on politics at the moment, and not on fundamentals and monetary policy,” she said.

Labour market data showed that British employers’ demand for staff grew in October at the slowest rate in almost eight years.

Nguyen said that the weaker labour data fits into a deteriorating economic picture - along with Brexit uncertainty and weak global growth - which could make the BoE more dovish.

“This should at least limit the appreciation potential of the pound over the medium to long term, but still the general direction of pound exchange rate will be determined by the general election,” she said.

MUFG European head of global markets Derek Halpenny wrote in a note that he saw downside risks for the pound in the short-term.

“On the political front, it would only take some gains for the Labour Party in the polls to unnerve the markets over the risk of the upcoming general election failing to resolve the Brexit gridlock,” he wrote.

“The risks associated with that don’t appear priced at present,” Halpenny said.

“An election result that returns a very unstable government would also undermine prospects of any considerable fiscal easing,” he added.

Sterling-dollar implied volatility gauges with one-month durations - expiring just before the Dec. 13 election - were down slightly, having more than halved since their peak in mid-October.

Moody’s is due to review Britain’s credit rating later in the day. Britain is currently rated Aa2.

Reporting by Elizabeth Howcroft

U.S.-China trade war keeps markets on their toes

LONDON (Reuters) - Uncertainty about the fate of the trade negotiations between the United States and China kept markets on their toes on Friday, with European stocks benchmarks mimicking their Asian peers and retreating from the previous session’s highs.

Overnight on Wall Street, the Dow and S&P 500 reached record closing highs on hopes of a truce to end the damaging tariff war but a Reuters report that the White House opposed aspects of a tentative deal limited the day’s gains.

The pan-European STOXX 600 opened down 0.4% at 405 points, 10 ticks from its April 2015 record of 415. S&P 500 futures retreated 0.1% after the New York benchmark hit its highest closing level ever on Thursday.

“The trade deal is the predominant driver”, for markets at the moment said Lars Kreckel, global equity strategist at Legal & General Investment Management, noting that this morning dip in market was a just knee-jerk reaction to the latest news on the U.S.-China front.

The mood contrasts with Thursday’s surge of optimism in global markets on news Beijing and Washington had agreed to roll back tariffs as part of a first phase of a trade deal.

Worries the pact could fall apart are now prompting some investors to sell heading into the weekend.

Chris Jeffery, head of rates and inflation at the British financial service group said the “background music” to the trade row, a Federal reserve easing monetary policy and macroeconomic indicators stabilising had helped the recent rally.

Germany’s DAX, a gauge of investors’ sentiment on trade, moved in synchronicity with the rest of the market and eased 0.4%.

German exports posted their biggest rise in almost two years in September, data showed on Friday, providing some relief amid widespread concern that Europe’s largest economy will dip into recession in the third quarter.

“Market participants are getting increasingly ‘long’ on good news”, said Stephen Gallo, European head of FX strategy at Canadian bank BMO.

“The ‘payback’ in risk assets for a very downbeat picture earlier in the year looks unstoppable at the moment”, he added.

In the meantime, crude oil futures fell amid lingering uncertainty over the long-awaited deal and rising crude inventories in the United States.

Brent crude, the global benchmark, was down 16 cents, or 0.3%, at $62.13 a barrel by 0259 GMT, after gaining 0.9% in the previous session.

U.S. West Texas Intermediate (WTI) crude was down 56 cents, or 0.9%, at $61.73 a barrel. The contract rose 1.4% on Thursday.

Safe haven gold, which tends to rise during times of uncertainty, was a tad firmer, up 0.1% at $1,469.4 per ounce, having hit a five-week low of $1.460.7 on Thursday.

Moves in the currency market were restrained.

The dollar was treading water at 109.32 yen, after reaching a five-month high of 109.49 the previous day.

The euro was steady at $1.1050 as was the dollar index unchanged at 98.154 after hitting three-week highs of 98.236 on Thursday.

A Reuters poll found that the dollar’s persistent strength would continue well into next year.

Reference: Julien Ponthus with Sujata Rao

China says it has agreed with U.S. to cancel tariffs in phases

BEIJING (Reuters) - China and the United States have agreed to cancel in phases the tariffs imposed during their months-long trade war, the Chinese commerce ministry said on Thursday, without specifying a timetable.

An interim U.S.-China trade deal is widely expected to include a U.S. pledge to scrap tariffs scheduled for Dec. 15 on about $156 billion worth of Chinese imports, including cell phones, laptop computers and toys.

Tariff cancellation was an important condition for any agreement, ministry spokesman Gao Feng said, adding that both must simultaneously cancel some tariffs on each other’s goods to reach a “phase one” trade deal.

“The trade war started with tariffs, and should end with the cancellation of tariffs,” Gao told a regular news briefing.

The proportion of tariffs cancelled for both sides to reach a “phase one” deal must be the same, but the number to be cancelled can be negotiated, he added, without elaborating.

“In the past two weeks, the lead negotiators from both sides have had serious and constructive discussions on resolving various core concerns appropriately,” Gao said.

“Both sides have agreed to cancel additional tariffs in different phases, as both sides make progress in their negotiations.”

He did not give a timeline.

A source previously told Reuters that Chinese negotiators wanted the United States to drop 15% tariffs on about $125 billion worth of Chinese goods that took effect on Sept. 1.

They also sought relief from earlier 25% tariffs on about $250 billion of imports, ranging from machinery and semiconductors to furniture.

A person familiar with China’s negotiating position said it was pressing Washington to “remove all tariffs as soon as possible”.

A deal may be signed this month by U.S. President Donald Trump and Chinese President Xi Jinping at a yet-to-be determined location.

Dozens of venues have been suggested for a meeting, which had originally been set to take place on the sidelines of a now-cancelled mid-November summit of Asia-Pacific leaders in Chile, a senior Trump administration official told Reuters on Wednesday.

One possible location was London, where the leaders could meet after a NATO summit that Trump is due to attend from Dec. 3-4, the official said.

Gao declined to say when and where such a meeting could be.

Since Trump took office in 2017, his administration has been pressing China to curb massive subsidies to state-owned firms and end the forced transfer of American technology to Chinese firms as a price of doing business in China.

Reporting by Yawen Chen and Martin Pollard