Sep 25, 2018, by Lorcan Roche Kelly
Chinese officials said the country will boost domestic consumption, investment and business sentiment in order to protect the economy from the impact of U.S. tariffs. The comments come as both sides appear to be digging in for an extended trade war, with China’s Vice Commerce Minister Wang Shouwen telling reporters in Beijing that it is completely up to the U.S. when talks will resume. The approval for the sale of $330 million of American military equipment to Taiwan yesterday risks further escalating tensions between the world’s two largest economies.
President Donald Trump is scheduled to address the United Nations General Assembly at 10:15 a.m. Eastern Time this morning in a speech that is expected to focus on Iran and its nuclear program. In a meeting with French President Emmanuel Macron yesterday, Trump said his sanctions on the country were bearing fruit and it is too early for talks with Tehran. European Union countries have agreed to set up a mechanism that will allow companies based there to continue to do business with Iran, sidestepping U.S. sanctions on the country.
A barrel of Brent crude for November delivery was trading over $82 this morning as traders remain bullish following the weekend’s OPEC+ meeting in Algiers. Janet Kong, who heads energy giant BP Plc’s trading business in Asia, has warned that any spike in the oil price may be short lived as she sees sufficient supply for the next 12 months, adding that any negative impact to demand from the trade war between the U.S. and China still hasn’t been priced in.
Overnight, the MSCI Asia Pacific Index added 0.2 percent while Japan’s Topix index closed 1 percent higher at the end of the first session in a holiday-shortened week. In Europe, the Stoxx 600 Index was 0.3 percent higher at 5:50 a.m. as energy sector shares following the oil price higher. S&P 500 futures pointed to a gain at the open, the 10-year Treasury yield was at 3.108 percent and gold was higher.
A Bloomberg survey of economists says the central bank will raise rates tomorrow and will continue to hike once a quarter until June 2019. The responses signal that firming inflation and a tight labor market in the U.S. continue to outweigh any concerns related to the trade conflict. The Fed decision will come with an updated “dot plot” which may move markets more than any rate hike if the projected outlook comes as a surprise.