Overseas Headlines – March 6,2018

March 6,2018

United States:

Stock futures higher on signs North Korea open to talks

U.S. stock futures pointed to a sharply higher opening on Tuesday after South Korea said it would hold its first summit in more than a decade with North Korea and that the latter was open to talks with the United States on denuclearization. The news added to early gains for U.S. markets, which have been recovering from a bout of concern over the possibility of a global trade war following remarks by President Donald Trump last week. At 6:49 a.m. ET, Dow e-minis 1YMc1 were up 147 points, or around 0.6 percent. S&P 500 e-minis ESc1 gained 12.25 points, or around half of a percent and Nasdaq 100 e-minis NQc1 rose 42.75 points, or 0.6 percent.



U.K. Consumer Spending Growth Cools

U.K. household spending was subdued last month as Britons expressed concern that Brexit will make them worse off. Annual consumption growth slowed from January as spending in supermarkets eased, Barclaycard said in a report on Tuesday. While overall retail sales rose on the month, sales of non-food items declined in the three months through February on a like-for-like basis, according to a separate survey by the British Retail Consortium. “Consumers are cautious about the potential ramifications of whatever settlement the U.K. achieves, and half of us fear that the outcome will leave us worse off than we are now,” said Paul Lockstone, managing director at Barclaycard. “As negotiations continue it’s likely that this will continue to weigh on sentiment.” Shoppers are downbeat about their spending power as talks to leave the European Union drag on without more clarity about what will happen when the country leaves the bloc next year. Brexit has also driven up inflation by weakening the pound, and the uncertainty about the outlook has prompted firms to hold back on hiring and investment. There are some signs that Britons will regain some purchasing power this year if wages start growing faster than prices — a scenario predicted by the Bank of England. Advertised salaries climbed to the highest since April 2016 in January, employment search company Adzuna said in a separate report.



Asia’s Biggest Currency Gain in 20 Years May Be About to End

Asian currencies may be on the verge of a correction after completing the best year in at least two decades. The warning sign? Indonesia’s rupiah slumped to a two-year low last week. The rupiah is seen as a bellwether of sorts for Asia given the high foreign ownership of the nation’s bonds. The currency is typically among the first in the region to be sold when sentiment sours, and this often heralds a broader decline among its peers. The rupiah has tumbled 1.6 percent in the past month, the worst performer in Asia and third-worst among 24 emerging-market currencies worldwide. It fell as overseas investors sold the nation’s stocks and bonds, and equity volatility jumped due to expectations of higher U.S. interest rates. “Indonesia’s rupiah is arguably the high-beta version of Asian ex-Japan risks,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore. “The declines are certainly not peculiar to IDR. Nor are they conclusively behind us. The upshot is that with uncertainty around global trade risks, global liquidity is set to start declining, albeit gently, later this year. AXJ air-pockets are anticipated.” The Bloomberg JPMorgan Asia Dollar Index, which measures 10 of the region’s currencies against the greenback, climbed 6.7 percent last year, the biggest annual advance in data that started in 1994. If the rupiah proves to be the canary in the coal mine, the gauge may give back a lot of those gains this year.