Equities lifted by US - Canada trade deal - 2.10.2018

Dollar strengthening persists

US equities rebounded on Monday supported by news US and Canada reached a deal in trade negotiations. The S&P 500 rose 0.4% to 2924.59. Dow Jones industrial climbed 0.7% to 26651.21. The Nasdaq composite index however slipped 0.1% to 8037.30. The dollar strengthening continued as Markit’s manufacturing index’s final reading for September remained at 55.6 up from previous month’s 54.7, while a reading on manufacturing from the Institute for Supply Management slipped to 59.8 from 60.1: live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, added 0.1% to 95.291 and is higher currently. Futures on stock indices indicate lower openings today.

CAC 40 opens lower than main European indices

European stocks recovered on Monday as the boost to investor confidence from US-Canada trade deal outweighed concerns about Italy’s budget deficit plan of 2.4% of GDP. EUR/USD’s and GBP/USD decline continued and both pairs are moving lower currently. The Stoxx Europe 600 index rose 0.4% supported also by report euro-zone’s unemployment rate slipped from 8.2% to 8.1% in August, near a decade low. The DAX 30 rallied 0.9% to 12354.26 and France’s CAC 40 gained 0.4%. UK’s FTSE 100 slipped 0.2% to 7495.67. Markets opened 0.4% - 0.6% lower today.

Asian indices retreat

Asian stock indices are mostly lower today with China’s financial markets closed for this week for national holidays. Nikkei however added 0.1% to 24270.62 while yen tuned lower against the dollar. Hong Kong’s Hang Seng Index is 2.5% lower after opening following Monday’s holiday as a Sunday report showed Chinese manufacturing sector expansion slowed in September. Australia’s All Ordinaries Index extended losses 0.8% despite accelerated slide in Australian dollar against the greenback as the central bank left interest rates unchanged at 1.5%.

Brent slips

Brent futures prices are edging lower today supported by concerns OPEC and Russia may not have spare capacity to replace Iran’s crude export after US sanctions against Iran take effect in November. Prices jumped yesterday: December Brent crude rallied 2.7% to $84.98 a barrel on Monday.