Asian stock markets showed a positive attitude and increase positions Monday morning. Market participants were in good mood due to the news that the negotiation process on a trade agreement between the US and China had finally gotten off the ground.
However, this is not an assurance that the tension has already ended. Last week, the US authorities continued their policy of imposing sanctions against Chinese officials. This time, the head of the Hong Kong administration and ten other officials of this province fell under the hot hand of the US government.
Now the main problem for the markets is whether there will be retaliation from the Chinese authorities and whether this can harm the negotiations already scheduled for the end of this week. At the very least, investors will now follow the course of events with a particular bias, and any changes in this direction may lead to a change in the balance of power on the stock markets.
Japanese trading floors were closed on Monday due to a national holiday, so it is worth evaluating the reaction here later.
China's Shanghai Composite Index rose 0.9%. On the contrary, the Hong Kong Hang Seng Index felt the tension and went into the red zone declining 0.27% so far.
Chinese statistics, however, are losing their previous positive. The inflation rate in the country for the second month of summer has changed upward. Growth reached 2.7% compared with 2.5% in June. Analysts' preliminary forecasts were also better than real data: an increase was expected to a maximum of 2.6%.
The negative also affected the prices of Chinese manufacturers, which recorded a decline for the sixth time in a row. This time, the fall was 2.4% compared to the previous 3% level recorded in the first month of summer. It was assumed that prices will not fall by more than 2.5%, which was actually confirmed.
South Korea's Kospi index went up by 1.42%.
The Australian index grew even more by 1.87%. However, some warning signs still persist here. These include, in particular, an increase in the coronavirus mortality rate in one of the states in Australia which is Victoria. Over the past 24 hours, the number of deaths increased by 19, which cannot but worry the officials, since the epidemiological situation is far from stable. In this regard, the country's authorities are already saying that they are unlikely to be able to open the state's borders until Christmas, which is a rather significant factor of pressure on the markets.
There was some confusion on the trading floors of the US on the last business day of last week. The Dow Jones and S&P 500 stock indicators closed in the green zone, while the Nasdaq unexpectedly began to correct downward.
The Dow Jones Industrial Average was able to rise by 0.17% or 46.50 points, which allowed it to move to the level of 27 433.48 points.
The Standard & Poor's 500 index was marked by a slight increase of 0.06% or 2.12 points, which moved it to the region of 3 351.28 points.
The Nasdaq Composite index was the only one that showed negative dynamics declining by 0.87% or 97.09 points, which dragged it around 11,010.98 points.
In general, over the past week, all indices were marked by growth. So, the most rapid rise was recorded in the Dow Jones amounting to 3.8%. The other two indicators, the S&P 500 and the Nasdaq gained 2.5% each. For the former, however, this has been a significant increase over the past few weeks.
The main news that investors played here was related to incentive payments to citizens of the country. Recall that President Donald Trump had to sign a document bypassing Congress since Democrats and Republicans were never able to reach an agreement on this issue.
In addition, the growing conflict between the US and China adds negative emotions to market participants. The sanctions against two well-known Chinese companies did not add any positive to the market. The sanctions measures against Hong Kong officials, which became known today, also do not help to raise investor sentiment.
The statistics on the economic growth of the US slightly supported the mood of market participants. Thus, the statistics on its labor market, which came out on Friday, showed an increase of 1.763 million in the number of jobs in the state in the second month of summer. Meanwhile, the overall growth rate of this indicator began to decline. So, in June this year, a tremendous rise of 4.791 million was recorded, which became a new record.
The unemployment rate in the United States in the second month of the summer was lower and reached 10.2% compared with the June level of 11.1%. At the same time, the preliminary data turned out to be somewhat more modest than the real ones: experts argued that there would be a decrease of no more than 10.5%.
All this, of course, encourages investors, who continue to hope that the country's economy will be able to overcome the crisis associated with the coronavirus pandemic faster. However, good data on the unemployment rate and the number of jobs may stop officials from the next portion of the stimulus. At least, the very process of making this decision can be complicated.
The country's government has more doubts about the need for new support measures against the backdrop of a fairly significant improvement in the situation in the country. Nevertheless, the regularity of officials may negatively affect the indicator statistics themselves in the future.
Meanwhile, there was a multidirectional movement of the main stock indicators in the European stock market on Monday morning. Although positive news about the signing of a decree on support measures in the US provided support here as well. And the negative was provided by the continuation of the escalation of the conflict between Washington and Beijing.
The general index of large enterprises in Europe Stoxx Europe 600 fell 0.07% and moved to the level of 363.31 points. In general, over the past week, it increased by 2%, which is a pretty good result.
The German DAX index dropped 0.38%. The French CAC 40 index sank slightly by 0.07%. Also, Italy's FTSE MIB index did not drop too much, decreasing by 0.08%. However, there are indicators that, on the contrary, continued to grow: for example, the Spanish IBEX 35 index gained 0.24%, while the UK index increased by 0.09%.
