China Promotes Globalization, EU Activity Slows, US Market Braces For Hectic Week

China Promotes Globalization At International Import Expo

China’s President Xi Jinping promoted the country as a bastion of global trade in his opening address to the China International Import Expo. The expo, announced more than a year ago, is intended to spotlight China as an importer of global consumer items and a stark contrast to relations with the US. The US/Chinese trade impasse continues to wear on although there has been a softening of rhetoric in the last week. The new stance is that both China and the US are committed to improving trade relations and usher in a new economic age for both nations.

Asian indices were not reassured by Xi’s remarks. The major Chinese indices both posted losses led by the Hong Kong Heng Send Index. The Heng Seng shed nearly -2.10% on fear trade relations with the US will linger into the foreseeable and continue to hinder Chinese economic activity. The Japanese Nikkei fell -1.55% while the Korean Kospi shed -0.91% ad the Australian ASX declined -0.53%.

European Markets Mixed On Weak PMI Data

The European equities markets were mixed at midday on Monday. While most indices were trading higher the gains were small, near -.25%, and not all were trading in the green. The major source of woe was weaker than expected Services PMI which fell -1.7% from the last month. The news adds to concerns the EU economy is slowing faster than expected and had the EUR/USD moving lower in early Monday trading.

Along with the data, traders have their eye on a meeting of EU finance ministers which started today. At the meeting, ministers are expected to discuss the proposed Italian budget and plans for increased spending. Italian officials say the plan will spur a new era of expansion within the EU; most pundits think the plan will be rejected as it does not comply with terms of Italy’s bail-out.

US Markets Brace For Hectic Week, FOMC and Elections Are In Focus

The US markets are bracing for a busy week. Not only are there still a significant number of closely watched S&P 500 companies left to report earnings, but there is also the geopolitical risk and an FOMC meeting on tap. The FOMC is meeting on Tuesday and Wednesday of this week with an expected policy statement scheduled for Wednesday afternoon.

There is little expectation the FOMC will raise rates at this meeting, but the chances of a rate hike in December are steadily rising. Last week, the non-farm payrolls report revealed US wages growing at a 3.1% pace YOY, up 0.2% from the previous month, and another indication of rising inflation within the economy.

On the political front, US markets are hampered by uncertainty over the mid-term elections. The races are tight in most cases, but there is an expectation some seats will flip either to Democrat or Republican.

The US indices were mixed in early trading Monday morning. The S&P 500, Dow Jones Industrial Average, and NASDAQ Composite were all indicated to open with moves less than 0.25% although not all in the same direction. Traders will also be watching relations with Iran as oil sanctions go into effect.