European stocks expected lower amid geopolitical concerns
European stocks are expected to open bit lower on Monday amid geopolitical concerns and S&P’s downgrading of China’s sovereign rating last week. The rating has caused worries regarding the economic outlook for China. Speeches by ECB President Mario Draghi and Federal Reserve Chair Janet Yellen are awaited by investors. While Draghi will address EU lawmakers in Brussels, Yellen will deliver speech in Cleveland, Ohio. Bank of England Governor Mark Carney will speak alongside Fed Vice Chairman Stanley Fischer later this week.
Meanwhile, the much anticipated brexit speech by Prime Minister Theresa May did not offer much information regarding Britain’s approach on business after brexit and how Britain might retain preferential access to Europe’s single market.
Brexit Secretary David Davis will lead the UK team of negotiators into their fourth round of talks with chief EU negotiator Michel Barnier in Brussels later today.
Elsewhere in Europe, German Chancellor Angela Merkel won a fourth term in office, confirming the expected results.
In New Zealand, Prime Minister Bill English’s National Party won the most votes, but it could take weeks for the country to form a new government.
In the Asia-Pacific, tensions between North Korea and the US continued to swell. The leaders of the two nations had exchanged heated words over the last week that impacted Asian shares which traded mostly lower.
In Japan, speculations of a new economic package and snap elections saw the dollar up against the yen. The country’s prime minister is expected to compile a package of around 2 trillion yen.
Gold prices firmed up while oil extended Friday’s gains after oil producers said their commitment to cut production and clear a global cut is working. The pound edged up after slipping late last week.
The day’s economic calendar remains light, with Germany’s Ifo business confidence survey results due later in the session. Economists expect the business sentiment index to remain unchanged at 115.9 in September.
US stocks ended narrowly mixed on Friday as fresh tensions between the US and North Korea sent bond yields lower and Sen. John McCain said he wouldn’t support the latest Republican effort to roll back the Affordable Care Act.
European markets also ended Friday’s session mixed amid geopolitical worries. Upbeat business activity data from the euro zone failed to cheer up as it was overshadowed by the heated rhetoric between the leaders of North Korea and the US.
The pan-European Stoxx Europe 600 index closed 0.1% higher, France’s CAC 40 index rose 0.3% and the UK’s FTSE 100 added 0.6% while the German DAX slid 0.1%.
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