Asia
The Hong Kong market was once again the best-performing in the region at the start of the new trading week. The Hang Seng rose over 400 points or over 1% to close above 31,500 points – the index was below 30,000 points at the start of last week.
President Trump’s decision to block Chinese firm ZTE (763) from working with US companies was badly received by the China and Hong Kong-listed tech sector. The move also seemed to stoke fears of protectionism and trade wars between the US and China.
Today’s apparent U-turn, in which the US President vowed to protect ZTE Chinese workers, was received by investors as tentative signs of progress in ongoing trade talks between the two companies.
Hong Kong-listed ZTE suspended its activities on May 9 after the seven-year ban in working with US companies was imposed.
As the US dollar inched towards 110 yen on Monday, Japanese equities were given a mild push to the upside.
Europe
Once again, political risk emerged in the eurozone with news that a populist government is set to come to power in Italy. Five years ago such news would have led to a spike in Italian bond yields and pressure on the stock market. Today eurozone investors were more sanguine, and the FTSE MIB index was very marginally down on the day.
Shares in Euro Stoxx 50 component Airbus (AIR) were down on Monday as the company’s finance chief announced that he would be joining CEO Tom Enders in leaving the company next year.
Investors in British Gas owner Centrica (CNA) were cheered more by cost efficiencies in the first four months of 2018 than the fall in residential customers.
The UK’s FTSE 100 was just in positive territory in midmorning trading, holding above the recently claimed 7,700 points level.
North America
Trump’s rapprochement with the Chinese authorities over ZTE has come at a good time for investors preoccupied by the fallout from the Iran nuclear deal. Dow futures are pricing in a gain of 100 points at the start of the new trading week as cautious optimism returns to global markets. Progress over North Korea denuclearisation is also helping rebuild the bulls’ confidence.
This week Cisco Systems reports (CSCO) reports on Wednesday, Walmart (WMT) on Thursday.
US retail sales are in view on Tuesday and Canadian inflation data will be released on Friday.
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