April 10, 2018, by Lorcan Roche Kelly
Xi plays it soft
Chinese President Xi Jinping’s landmark economic speech came as a relief to investors as he sought to move away from confrontation with the United States, saying dialogue is the way to resolve disputes. Xi pledged a “new phase of opening up” the Chinese economy, reprising previous remarks, in a speech that did not mention Trump by name. While the emphasis on dialogue is being viewed as positive, the breakdown of trade talks last week — which stalled over China’s support for its high-tech industry — signal the difficult road ahead.
The ruble plunged to the weakest level since December 2016 and the Russian stock market was lower again today following yesterday’s biggest plunge since the annexation of Crimea in 2014. The continuing fallout from Friday’s U.S. sanctions has hit Oleg Deripaska’s United Co. Rusal particularly hard, with one executive at a trading house calling the measures “economic murder of the company.” The sanctions against billionaires connected to the Kremlin, coupled with the White House’s tougher stance on Syria, give investors little reason to increase exposure to one of the world’s most attractively valued markets.
President Donald Trump described the FBI raid on the office of his personal attorney yesterday as a “disgraceful situation,” adding that he sees it as an “attack on our country.” The comments reflect Trump’s continuing frustration at Special Counsel Robert Mueller’s probe that has reached far into the president’s inner circle. Speculation is mounting that he may now undertake a purge of law enforcement officials, a move which would draw bipartisan condemnation.
Overnight, the MSCI Asia Pacific Index added 0.7 percent, while Japan’s Topix index closed 0.4 percent higher as stocks in the region reacted positively to Xi’s speech. In Europe, the Stoxx 600 Index was 0.7 percent higher at 5:50 a.m. Eastern Time as trade tensions eased and some companies issued positive-earnings updates. S&P 500 futures pointed to a gain at the open, the 10-year Treasury yield was at 2.801 percent and gold was unchanged.
At 8:30 a.m., U.S. March PPI is published, with February wholesale inventories at 10:00 a.m. But the main event for today is likely to be the start of Facebook Inc. CEO Mark Zuckerberg’s two-day testimony to Congress. While he will present a mea culpa, investors will be looking out for how the company intends to remedy the errors that have led to recent data breaches.