Financial Markets Update – 21/8/2018

US

• US. stocks and Treasuries rose yesterday as traders held onto hopes for an easing of the trade war and await clues from a meeting of central bankers later this week.
• The S&P 500 Index edged higher for a third day, rising 0.2%, led by companies in the consumer-discretionary sector.
• The 10-year Treasury yield declined after respected bond manager Jeffrey Gundlach warned of a short squeeze.
• The dollar remained mixed against peers after President Donald Trump said he expected Jerome Powell to be a cheap-money Fed Chairman.
• In economic news, investors will be closely watching this week’s Jackson Hole symposium for clues on monetary policy, and to see whether central bankers can do anything to help bring back stability after the recent bout of emerging market-led volatility.

Europe

• European stocks rose 0.6%, buoyed by hopes of easing tariffs ahead of a U.S. visit by China’s Vice Commerce Minister Wang Shouwen this week for the first significant trade negotiations between the two countries in more than two months.
• Meanwhile, Turkey’s woes show no signs of abating with its credit rating downgraded further late Friday and shots fired around the U.S. embassy.
• There’s a silver lining from Turkey’s recent turbulence for European shares: the euro’s recent weakness may be a lift to future earnings, with its year-on-year change turning negative recently.

Asia

• China’s benchmark stock index, extended gains Tuesday and headed for its biggest two-day advance in four weeks. The gain of 1.3% came as state-backed funds stepped in Monday to buy shares, people familiar with the matter told Bloomberg, sparking the rally.
• Japanese stocks gained 0.1%, as Telecoms and banks weakness dragged on gains from chemicals and drugmakers.