· U.S. stocks traded in a tight range on Monday as Wall Street tempered its expectations for this week’s trade negotiations between Washington and Beijing and looked ahead to the latest monetary policy decision from the Federal Reserve.
The Dow Jones Industrial Average rose 28.90 points — about 0.1% — to finish at 27,221.35 as modest gains in Home Depot, Merck and Intel pulled the blue-chip index higher. The S&P 500 fell 0.16% to 3,020.97as financials, consumer discretionary and communication services stocks lagged.
The tech-heavy Nasdaq Composite, meanwhile, dropped 0.44% to close at 8,293.33 as Amazon fell 1.5%, Microsoft lost 0.2% and Facebook shed 1.9%.
Investors are also likely to closely monitor whether the central bank will signal more cuts over the coming months. Economists mostly anticipate anywhere from one to three rate cuts this year.
· President Donald Trump on Monday took to Twitter to jab the Fed ahead of its July meeting, criticizing the central bank for what he characterized as oppressive interest rates.
“The E.U. and China will further lower interest rates and pump money into their systems, making it much easier for their manufacturers to sell product,” the president said on Twitter. “In the meantime, and with very low inflation, our Fed does nothing - and probably will do very little by comparison. Too bad!”
· European stocks closed higher on Monday afternoon as U.S. and Chinese trade negotiators prepare to meet in Shanghai for the first in-person trade talks since a truce was agreed in June.
The pan-European Stoxx 600 restored early gains to close 0.14% higher as markets reacted positively to a series of potential mergers and earnings. Telecoms and financial services stocks closed with 1.5% and1.7% climbs respectively, while autos struggled to make headway, falling 0.9%.
Expectations for progress during the impending two-day meeting in Shanghai are low, and White House economic advisor Larry Kudlow told CNBC on Friday that negotiators would “hopefully go back to where the talks left off last May.”
Investors will also be awaiting the U.S. Federal Reserve’s monetary policy meeting this week, with the Fed widely expected to cut interest rates by 25 basis points.
· New British Prime Minister and Conservative Party leader Boris Johnson plans to visit Scotland on Monday after the head of the Scottish Conservatives said that she would refuse to support the U.K. leaving the European Union without a deal. The Confederation of British Industry (CBI) also said on Sunday that the EU was lagging behind Britain in its preparation for a no-deal Brexit.
· Stocks in Asia Pacific edged up in Tuesday morning trade as investors await developments from U.S.-China trade talks this week in Shanghai as well as monetary policy decisions from major central banks.
The Nikkei 225 rose 0.55% in early trade, with shares of index heavyweight Fanuc jumping 3.45%. The Topix index also added 0.46%.
Investors will be watching for the Bank of Japan’s announcement of its decision on interest rates at 11:00 a.m. HK/SIN on Tuesday, after the European Central Bank last week signaled a potential rate cut and more monetary easing ahead.
“The BoJ is widely expected to make no monetary policy changes and reiterate its ‘powerful monetary easing’ stance,” Richard Grace, chief currency strategist and head of international economics at Commonwealth Bank of Australia, wrote in a morning note.
The risk that the Japanese central bank introduces more aggressive easing measures, however, “cannot be ruled out,” Grace said. This could result in a “headwind” for the Japanese yen. The currency last traded at 108.87 against the dollar after weakening from levels below 108.5 yesterday.
Meanwhile, government data released earlier on Tuesday showed Japan’s factory output falling more than expected in June.
In South Korea, the Kospi rose 0.45% following a slump on Monday, with shares of index heavyweight Samsung Electronics jumping more than 1%. Over in Australia, the S&P/ASX 200 gained 0.65%.
Overall, the MSCI Asia ex-Japan index added 0.22%.
Reference: CNBC
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