World Markets 'In A World Of Pain'

World Markets "In World Of Pain" As Nothing Can Stop Relentless Stock Selling

After another painful week for bulls, it's again a sea of red this morning with the selling extending on Monday as U.S. equity futures slide but off their worst sessions while European stocks follow Asian shares lower as traders focused on the latest dismal trade and inflation data from China over the weekend and the sharp drop in Japan's GDP, renewing concerns for slowing global growth while the escalation of tensions between Washington and Beijing continues. The dollar was mixed while the euro advanced, and 10Y TSY yields rebounded from session lows.

The biggest surprise may be that Monday is not more in the red, with the following non-exhaustive list of potential risk-off drivers hanging over Monday's open (as succinctly summarized by Bloomberg's Garfield Reynolds):

• China summons U.S. Ambassador over the Huawei case
• Trump Chief of Staff Kelly to leave, amid a welter of fresh Mueller developments
• China reports weaker trade and inflation data
• May pushes ahead on Brexit vote despite Cabinet, DUP opposition
• Soggy U.S. payrolls, though not soggy enough to stop a December Fed hike
• France protests intensify, raising concern of economic damage

"Another day, another reason to sell risk. Equity markets remain in a world of pain with everyone in search of a very elusive silver lining," said Stephen Innes at brokerage OANDA

MSCI’s all-country index has spent four weeks in the red, despite intermittent rallies fueled by hopes of trade war detente, and was set to start the 5th week in the red. The pessimism has been exacerbated by data showing the world’s largest economies — the United States, China, Japan and Germany — are all headed for slower growth. That pushed the index another 0.5% lower, while Europe's Stoxx 600 fell almost one percent in early trading led by a retreat in chemical, media and auto companies, and U.S. equity futures were down 0.4%, if rebounding from losses as much as 1%, suggesting more pressure on Wall Street later in the session.

Last week’s arrest of Huawei's CFO for extradition to the United States was seen putting up another hurdle to the resolution of a trade war between the world’s two biggest economies. U.S. trade rep Robert Lighthizer said Sunday there was a “hard deadline” to the 90-day trade ceasefire and without a successful end to talks by March 1, Washington would impose new tariffs on Chinese goods.

“The trade theme will preoccupy the markets through the 90-day truce period between the United States and China, waiting for any signs of concession between the parties,” said Soichiro Monji, senior economist at Daiwa SB Investments in Tokyo.

Economic data has disappointed, too, underscoring the impact of the trade wars on the world economy. Following weak trade and inflation data on the weekend, China posted far weaker-than-expected November exports and imports...

Top Overnight News

• President Donald Trump’s trade team sought to insulate talks with China from a growing dispute over the U.S. pursuit of a Huawei executive on Sunday, but struggled to address financial markets’ fears that a fragile truce with Beijing was at risk
• U.K. Prime Minister May must decide Monday whether to put her Brexit deal to a vote in Parliament this week and risk a defeat that could plunge the U.K. into more political chaos.
• The U.K. can unilaterally reverse Brexit, the European Union’s top court said in a ruling that will fuel the campaign to thwart the divorce on the eve of a make-or-break vote in the British Parliament
• China’s Vice Foreign Minister Le Yucheng has summoned the U.S. Ambassador to China in a protest over the arrest of Huawei’s Chief Financial Officer Meng Wanzhou, and said it will take “further action” if needed
• President Trump’s trade team sought to insulate talks with China from a growing dispute over the U.S. pursuit of a Huawei executive on Sunday, but struggled to address financial markets’ fears that a fragile truce with Beijing was at risk
• Australian central bank Assistant Governor Christopher Kent reiterated the next interest-rate move would likely be a hike, “but not anytime soon”
• Escalating trade tensions between the U.S. and China risk derailing the global economy by undermining business confidence and increasing the cost of living, IMF’s Managing Director Christine Lagarde said
• Japan’s economy shrank more than initially projected, driven by the biggest drop in business spending in nine years amid a series of natural disasters
• Italy’s government will discuss the results of a highly-awaited cost analysis of its 2019 budget proposals this week, just as the country’s populist leadership’s standoff with the European Union comes to a head with the threat of sanctions
• French President Emmanuel Macron is due to address the nation on Monday, with everyone from Yellow Vest protesters to his dwindling band of supporters awaiting a solution to end the downward spiral of Europe’s second-largest economy