· Euro zone business growth stalled this month, a survey showed on Monday, dragged down by shrinking activity in powerhouse Germany, where a manufacturing recession deepened unexpectedly.
Monday’s downbeat survey results come less than two weeks after the European Central Bank pledged indefinite stimulus to revive the 19-country currency bloc’s ailing economy.
IHS Markit’s Euro Zone Composite Flash Purchasing Managers’ Index (PMI), sank to 50.4 in September from 51.9 in August and was below all forecasts in a Reuters poll that had predicted a reading of 51.9.
The euro was 0.25% lower against the greenback at $1.0989.
The euro zone economy is not showing any convincing sign of a rebound and a persistent downturn in manufacturing risked infecting the rest of the economy, European Central Bank President Mario Draghi said on Monday.
The dollar index, which measures the greenback against a basket of currencies, was 0.16% higher at 98.67, its highest since Sept. 12.
Sterling slipped 0.43% to trade close to a one-week low as investors looked for signs of progress in Britain’s Brexit talks and awaited a Supreme Court ruling on whether Prime Minister Boris Johnson misled Queen Elizabeth over his reasons for suspending parliament this month.
· Mario Draghi said the eurozone economy faced a much more “prolonged sag” than was expected even a few months ago, as the European Central Bank president justified the monetary stimulus he announced this month.
Mr Draghi’s comments came after a key survey of business executives showed that the eurozone’s economy was close to stalling, dragged down by a steep drop in German manufacturing activity. The new data hit markets and prompted predictions of imminent recession on Monday.
Appearing for the final time as ECB president in front of the European Parliament, where he was widely praised for saving the eurozone from its debt crisis, Mr Draghi said “geopolitical uncertainty” had stopped the bank achieving its inflation target despite the fact that unemployment in the region had fallen to its lowest level for a decade.
· U.S. President Donald Trump on Monday questioned a decision by his top trade negotiators to ask Chinese officials to delay a planned trip to U.S. farming regions after trade talks last week, saying he wanted China to buy more American farm products.
U.S. Treasury Secretary Steven Mnuchin told reporters at the United Nations General Assembly that the trade talks would resume next week with Chinese Vice Premier Liu He returning to Washington to meet with him and U.S. Trade Representative Robert Lighthizer.
Mnuchin had said the trip was delayed at the administration’s request to avoid confusion over the talks.
Mnuchin explained again that the U.S. side “didn’t want confusion around the trade issues.”
Trump then interjected: “Yeah, but I want them to buy farm products.”
“There was no confusion,” Mnuchin replied. “We want them to buy agriculture. They have committed to buy agriculture. And they’re doing that”
· Chinese importers bought about 10 boatloads of U.S. soybeans on Monday following deputy-level trade talks in Washington last week that were overshadowed by the abrupt cancellation of a U.S. farm state visit by Chinese agriculture officials.
The deals for about 600,000 tonnes, slated for shipment from Pacific Northwest export terminals from October to December, were similar in size to a wave of buying earlier this month, two traders with direct knowledge of the deals said.
Benchmark U.S. soybean futures on the Chicago Board of Trade <0#S:> jumped about 1.5% on news of the renewed buying, the market’s steepest rise since Chinese buyers bought a large volume of U.S. soybeans on Sept. 12.
· St. Louis Federal Reserve President James Bullard said on Monday it was probably inevitable that the United States and China would clash on trade, given that China has not lived up to commitments made when it was allowed into the World Trade Organization.
“The Chinese were allowed into the WTO on an implicit promise that they would abide not just with the letter but with the spirit of the WTO and that they would transition toward democracy,” Bullard said. “Neither of those things have happened.”
· For incoming European Central Bank President Christine Lagarde, the U.S.-China trade war is the biggest threat to the global economy.
Lagarde, who has run the International Monetary Fund since 2011 and was selected in July to replace Mario Draghi on Nov. 1, said the tariffs that the U.S. and China have slapped on each other’s goods are set to shave 0.8% off global economic growth in 2020.
“That’s a massive number,” Lagarde said in an interview with CNBC’s Sara Eisen. “It’s fewer jobs. It’s less business going on. It’s less investment. It’s more uncertainty. It weighs like a big, dark cloud on the global economy.”
“I think trade — threat against trade at the moment — is the biggest hurdle for the global economy, yes, indeed,” she added.
· A U.S.-Japan trade deal hit a last-minute snag as Japanese officials sought assurances that the Trump administration will not impose national security tariffs on Japanese-built cars and auto parts, people familiar with the talks said on Monday.
U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe are aiming to sign a trade deal at a meeting this week during the United Nations General Assembly in New York that provides increased access to Japan for U.S. agricultural goods and bilateral cuts in industrial goods tariffs.
· British opposition Labour leader Jeremy Corbyn won support for his Brexit strategy on Monday, fighting off a challenge by members who wanted him to immediately back remaining in the European Union before any election.
Instead, members fell into line and backed Corbyn’s stance to first try to win an election, renegotiate the Brexit deal and then hold a special conference to decide the party’s position – either to leave with a deal or remain - in a second referendum.
· The European Union’s Brexit negotiator said on Monday it was difficult to see a way to break the Brexit impasse as British Prime Minister Boris Johnson’s demand to drop an insurance policy for the Irish border was unacceptable.
Hopes of a deal to ease the transition were stoked when Johnson said the shape of an accord was emerging and European Commission President Juncker said an agreement was possible.
But EU negotiator Michel Barnier cast doubt on the likelihood of a deal and reaffirmed that the bloc could not agree to London’s demand to remove the Irish “backstop”, a policy to prevent a return of border controls on the island of Ireland, without a serious alternative.
· Britain, Germany and France backed the United States and blamed Iran on Monday for an attack on Saudi oil facilities, urging Tehran to agree to new talks with world powers on its nuclear and missile programs and regional security issues.
· Oil ended about 1% higher on Monday after a volatile trading session as traders focused on when Saudi Arabia would be able to restore full output following the Sept. 14 attack on its facilities.
Brent futures gained 49 cents, or 0.8%, to settle at $64.77 a barrel, while U.S. West Texas Intermediate (WTI) crude gained 55 cents, or 1%, to settle at $58.64.
· U.S. President Donald Trump and his South Korean counterpart held a summit in New York on Monday to discuss plans to restart U.S.-North Korea talks, as the allies prepare for talks in Seoul on sharing the cost of American soldiers stationed in South Korea.
Though negotiations with North Korea have stalled since a failed second summit between Trump and its leader Kim Jong Un in February, the North has said it is willing to restart talks in late September. However, no date or location have been set.
Reference: CNBC, Reuters, Financial Times
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