Trump Exonerated, Global Equities Fall On Recession Fear, Asian Markets Lead RoutGlobal equities plunge after the U.S. ten-year treasury yield inverts, Trump is cleared of colluding with Russia.
U.S. Investors Breathe A Sigh of Relief
The U.S. index futures were indicating a flat to a mildly positive open for equities markets on Monday. News that the Mueller Report did not conclude Trump or his administration colluded with the Russian’s during the 2016 campaign. According to a summary sent to Congress, the Attorney General finds insufficient evidence to pursue criminal actions.
Investors cheered the Trump news as it alleviates many worries that have been plaguing the market. With the investigation behind us, Trump can turn his focus to finalizing a trade deal with China and the second round of tax cuts to be aimed at working-class America.
In trade news, Secretary of State Steve Mnuchin and Trade Ambassador Robert Lighthizer are going to Beijing later this week. This will be the third round of high-level talks and have the market hopeful a deal will be reached soon. Many experts believe a deal will be struck mid-April but there is no guarantee of that. There is no economic data scheduled to be released today and very little this week. The most important data point will be the PCE Price Index released on Friday.
A Plot To Oust May And Hard Brexit Plague EU Markets
Reports surfaced over the weekend that ministers and MPs opposed to Theresa May’s Brexit plan are plotting to remove her from office. The reports were refuted by May’s allies but do not alleviate the concern of Hard Brexit. The EU has agreed to extend the March 29 deadline but only conditionally. If May cannot garner more support for the Brexit Deal the EU may force a hard-Brexit. The FTSE led the market lower with a loss near -0.60% followed by a -030% decline in the DAX and CAC.
In stock news shares of LVMH plunged more than -8.0% after what was reported as a “fat finger” mistake. A fat finger mistake is when a trader accidentally buys or sells too many of a stock or the wrong stock. The multi-national luxury goods conglomerate recouped much of the loss but were still down about -0.50% at midday. Shares of German pharmaceutical firm Bayer were down about -2.0% after receiving a downgrade from Merril Lynch. The company is facing major damages after a court ruled a man’s cancer was caused by Roundup, a weed killing product produced by Bayer’s Monsanto unit.
Asian Markets Plunge, Japan Down -3.0%
Asian markets plunged in Monday trading because of the U.S. yield curve inversion. A yield-curve inversion is when a longer maturity bond’s yield falls below a shorter-maturity and is widely viewed as a signal of recession. The inversion occurred on Friday when the U.S. 10-year bond yield fell into negative territory and below the 3-month T-bill for the first time in over 10 years.
The Japanese Nikkei led the market lower with a loss of -3.0%. Shares of Softbank and Fanuc were down -5.0% and -3.80% respectively. The Shanghai Composite and Hong Kong Hang Seng were both down about -2.0%. Shares of Tencent led with a loss of -3.0%. The Korean Kospi also fell about -2.0% and was led by SK Hynix -4.0% decline. The Australian ASX posted a more moderate loss of -1.11%.