Trouble in Hong Kong, Argentina turmoil, equities struggle
U.S. equity futures struggled for direction after stocks fell in Europe and slumped in Asia as turmoil in Hong Kong and Argentina spooked investors who are already on the edge over the trade war.
The latest risk asset moves are adding to already skittish sentiment across markets during the low-volume month of August. With the U.S. and China offering no respite to their trade war and a slew of data pointing to slowing global growth, traders will look to this week’s eurozone GDP figures and industrial production reports from both China and America for further clues to the outlook.
Signs of the trade war’s impact are growing. Singapore’s government cut its forecast for economic growth this year to almost zero. In Europe, The Stoxx Europe 600 Index fell 0.6% as at mid-day on Tuesday, which was the third day in a row as automakers and retailers slid. Germany’s DAX Index extended a decline as data showed investor sentiment slumped.
In Asia, a regional benchmark headed for its biggest drop in a week. Hong Kong stocks were the worst hit as anti-government protesters again crippled the airport and the city’s leader warned it risked sliding into an “abyss.” Japan’s Topix gauge erased this year’s gain as it reopened following a long weekend.
US Treasuries were steady, the Japanes yen nudged higher and gold briefly broke above $1,530 an ounce. China’s 10-year bond yield touched 3% for the first time since 2016 as data showed credit demand in the country dropping.
Elsewhere, Argentina’s peso and stocks and bonds plunged on Monday following President Mauricio Macri’s stunning rout in primary elections over the weekend. Macri’s loss raised the prospect a populist government may take over and trigger another debt default.
European companies for the most part have little exposure to Argentina, thanks to decades of economic boom-and-bust and wild currency swings. The few that do have sizable operations in the country are paying the price this week as a political upset roils markets.