All hopes for better relations between China and the United States were dashed after the first talks began with mutual accusations in Anchorage, Alaska. At the meeting, each side sharply criticized the other for human rights, trade, and international relations. The Center for Strategic and International Studies points out that it is too early to conclude that this meeting is a harbinger of negative events, but it is certainly a rough start, and it shows the full depth of differences between the two countries.
The situation in the negotiations led to sales on Asian stock exchanges. The Shanghai Composite Index decreased by 1% at the beginning of trading, while the CSI 300 decreased by 1.9%. Prior to that, American stock exchanges showed a sharp decline. The Nasdaq 100 decreased by 3.1% and the S&P 500 lost 1.5%.
US Treasury bonds yield stabilized after a sharp rise in treasuries to 1.75% for the first time since January 2020. Oil prices have lost about 10%, partly due to fears of new restrictions in Europe related to the pandemic. Against this background, the US dollar rose.
Investors have begun the preparation for “Black Friday”, as in addition to the negative political background, the expiration of futures contracts and options is there to begin. This may strengthen the bearish mood in the market.
Nevertheless, hedge funds believe that this is only a short-term correction. Tribeca Investment Partners points out that the economic recovery is in full swing, and central banks around the world are supporting it, keeping monetary policy soft. The aggregate fundamental factors suggest that this is only a short-term fixation of profits, and stock market performance remains bullish.
Main market quotes:
- S&P 500 (F) 3,919.62 +13.62 (+0.35%)
- Dow Jones 32,862.30 -153.07 (-0.46%)
- DAX 14,715.25 -60.27 (-0.41%)
- FTSE 100 6,710.79 -68.89 (-1.02%)
- USD Index 91.690 -0.180 (-0.20%)
Important events:
- Australia Retail Sales (m/m) at 02:30 (GMT+2);
- BoJ Press Conference at 04:30 (GMT+2);
- Canada Core Retail Sales (m/m) (Jan.) at 15:30 (GMT+2).
