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© Reuters. A man on a bicycle examines an electronic board showing the Japanese average Nikkei in front of a broker in Tokyo.
By Hideyuki Sano
TOKYO (Reuters) – US equity futures, Asian stock markets and oil prices hit lows of several months Monday amid worrying tensions between China and the United States and new threats Washington's opposing pricing to Mexico could cause the global economy to recession.
E-mini futures for the S & P500 fell by 0.5% in Asian trade to 2738, close to their March 2002 low, while Japan's rose by 1.1% reach their lowest level in four months.
The MSCI's broadest index of Asia-Pacific shares outside Japan has not changed much at the beginning of the exchanges, but it has barely maintained above the four-month low of last week. The CSI 300 index of Chinese stocks rose 0.9%, but has remained in its recent range.
A private survey of the Chinese manufacturing sector, released on Monday, revealed a modest increase in factory activity as export orders rebounded after a contraction.
Yet a slightly better reading should not allay the growing fears about the economic impact of a growing trade dispute with the United States. Indeed, a series of recently released Chinese data, including an official survey of the country's manufacturing industry last week, showed growing pressure around the world. 2 economy.
Tensions intensified over the weekend as the two countries clashed for reasons of trade, technology and security.
A senior Chinese official and trade negotiator said on Sunday that the United States could not exert pressure to impose a trade deal on China, refusing to ask whether leaders of the two countries would meet at the G20 summit to reach a okay this month. .
China will investigate whether FedEx Corp (NYSE 🙂 has violated the legal rights and interests of its customers, the official Xinhua news agency said Saturday after Chinese telecoms giant Huawei announced the diversion of parcels.
"This could be seen as a retaliatory action against Huawei's ban on Washington.China could put FedEx on its blacklist of unreliable companies.We could see more attacks against companies individual, "said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ. Morgan Stanley (NYSE 🙂 Titles.
The confrontation between the world's two largest economies goes beyond trade, with tension becoming strong in anticipation of the thirtieth anniversary of the bloody crackdown by the Chinese army against protesters around Beijing's Tiananmen Square (NYSE: ).
Chinese Defense Minister Wei Fenghe warned the United States not to interfere with the security disputes over Taiwan and the South China Sea.
The remarks came after US Defense Secretary Patrick Shanahan told Saturday's meeting that the United States would no longer "follow" the Chinese behavior in Asia.
"Nobody now thinks that an agreement would be possible at the G20.It will be a long battle.Investors rush on secured assets," Mitsubishi's Fujito said.
Signs that Sino-US friction weighs heavily on the global economy, South Korean exports – seen as an indicator of global growth – fell 9.4% in May, a drop above the median forecast of 5 , 6%, official data. showed Saturday.
(GRAPHIC: Exports from Korea – https://tmsnrt.rs/2Kn47VJ)
"Speculators are now building trade positions to bet on a recession.If future US data, such as the ISM manufacturing survey, deteriorates, bearish bets on US equities should gain ground," he said. said Masanari Takada, multi-asset strategist at Nomura Securities.
The gloomy economic outlook has prompted traders to believe that the US Federal Reserve will lower interest rates as soon as possible.
Federal rate futures are now almost fully reducing rates by September, with a 50% chance that rates will change between July 30th and July 31st.
JPMorgan (NYSE 🙂 is now expecting the Fed to cut rates twice this year, a major change from its previous expectations that rates would remain unchanged until the end of 2020.
The 10-year US Treasury yield fell to 2.121%, a nadir last observed in September 2017.
In the oil markets, futures contracts fell 1.1% to $ 52.92, after reaching their lowest level since mid-February earlier in the day.
futures contracts fell 1.5% to $ 61.06 per barrel.
futures in Shanghai dropped 0.5% to their lowest level in two years.
In the foreign exchange market, the yen refuge has held up well. The dollar has changed hands at 108.19 yen, falling to 108.17, its lowest level since mid-January.
The euro, which is declining at a brisk pace this year, has hardly moved by 1.1171 dollars, against the low of 1.116 dollars last week.
Trade at $ 6.9418 for a dollar, near the 5.9-month lows of 6.9497 hit May 17.
The Mexican peso, hit by Trump's sudden threat of tariffs on Friday, regained some stability, trading at $ 19.6355 for a dollar after falling 2.5% Friday.
Mexican President Andres Manuel Lopez Obrador hinted on Saturday that his country could tighten migration controls to defuse tensions with Trump, while waiting for "good results" after the talks in Washington this week.
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