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Asia Opening: Global stocks fall as EU recovery fund talks stall

Good Morning and A Nice Week!

Economic Data Calendar is almost empty on Monday.

Shares across Asia-Pacific slip after European leaders fail to agree on size of stimulus.

Global stocks fell after EU leaders failed to break a logjam over the size of a coronavirus recovery fund and as new infections in the US continued to rise.

Japan’s benchmark Topix index shed 0.4 per cent in early Asia-Pacific trading on Monday, while Australia’s S&P/ASX 200 fell 0.5 per cent and South Korea’s Kospi dropped 0.7 per cent. Hong Kong’s Hang Seng was down 1 per cent.

EU leaders on Sunday failed to agree on the size of a recovery fund during the third day of a summit at which an offer from richer countries of €350bn in grants coupled with another €350bn in loans was rebuffed by those nations that have been hardest hit by the pandemic. Countries including France, Germany and Italy are pushing for grants of no less than €400bn.

“The commitment by EU leaders in extending talks and reports of further talks if no agreement is reached today shows the desire to have the recovery fund in some form,” said Tapas Strickland, director of economics at NAB.

China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks was one bright spot, rising 0.3 per cent.

In Hong Kong, chipmaker SMIC tumbled 7.6 per cent after its secondary issuance in mainland China last week. The company’s Shanghai-listed shares fell 8 per cent.

The weakness in the broader Hong Kong market came as the city suffered a fresh wave of coronavirus infections. Japanese stocks were weighed down by data showing exports in June fell by a faster rate than forecast by economists.

Futures markets tipped Wall Street’s S&P 500 to slide 0.5 per cent when trading begins later on Monday. London’s FTSE 100 was expected to fall 0.3 per cent.

US stocks inched up 0.3 per cent on Friday, allowing the S&P 500 to close higher for a third straight week. But the index remains in negative territory for the year with investors concerned over the impact of an expiration in unemployment benefits set for the end of the month.

Sentiment has also been damped by a surge in US coronavirus cases. Daily new cases topped 64,000 on Sunday as Texas, Florida and California continued to lead infection tallies.

Investors are looking for fresh clues on how the pandemic has hit corporate earnings, with Microsoft, IBM and Unilever among those that will report second-quarter results this week.

Oil prices lost ground with Brent crude, the international benchmark, down 0.7 per cent at $42.85 a barrel. West Texas Intermediate, the US marker, fell by the same amount, to $40.31.

Source: Financial Times – ft.com

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