SYDNEY, July 2 2018 : Asian shares were subdued today ahead of a week packed with major economic events, while Mexico’s peso MXN= firmed as exit polls pointed to a decisive victory for presidential front-runner Andres Manuel Lopez Obrador’s party.
Dealers said the seemingly clear win would at least settle one source of political uncertainty. Yet leftist Obrador is also expected to inject a dose of nationalism into government and sharpen divisions with U.S. President Donald Trump.
Oil prices had taken an early spill after Trump tweeted that Saudi Arabia had agreed to lift oil production by “maybe up to 2,000,000 barrels”.
The missive was later downplayed by the White House and Saudi Press Agency.
In share markets, Japan’s Nikkei .N225 dipped 0.1 percent, with a survey of manufacturers showing sentiment had darkened a shade in the face of trade war threats.
The purchasing managers’ index (PMI) still edged higher for June, though exports orders softened.
MSCI’s broadest index of Asia-Pacific shares outside Japan was a fraction firmer in early trade. The index shed 2 percent last week as trade concerns clouded the outlook for Chinese growth and pressured asset prices there.
Tension is growing ahead of a July 6 deadline when the U.S. is due to impose US$34 billion of tariffs on Chinese exports.
“The evidence suggesting this is happening is far from conclusive, but ominous data points are accumulating.”
A survey out over the weekend showed Chinese manufacturing activity cooled a little in June as export orders fell. The official Purchasing Managers’ Index (PMI) eased 51.5 in June, from 51.9 in May.
A slew of readings on manufacturing across the globe are due later on today, while the U.S. ISM report is out tomorrow. Minutes of the last Federal Reserve policy meeting come on Thursday and the week closes with U.S. payrolls for June.
In currency markets, the euro took a brief early knock on reports German Interior Minister Horst Seehofer had rejected a migration deal German Chancellor Angela Merkel negotiated at a European Union summit on Friday.
The currency then bounced on news Seehofer had offered to step down as minister and as chair of his Christian Social Union (CSU) party.
The move makes the future of Merkel’s government even more uncertain as her Christian Democrats party (CDU) relies on the CSU to maintain power through a coalition formed three months ago to end a political vacuum.
After all that the euro was a fraction easier at $0.1663 EUR=, having skidded as far as $1.1632 at one stage.
The U.S. dollar was a touch firmer on a basket of currencies at 94.689 .DXY, having recoiled from a 95.324 top on Friday. It added 0.3 percent on the yen to 110.97 JPY= and was again testing stiff resistance around 111.00. – Reuters