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S&P futures levitated on Monday, rising to a high of 2,962 and just shy of a new record, alongside buoyant Asian stocks while European shares slumped as the Stoxx 600 Index reversed an earlier gain following the third profit warning from Daimler, and a slump in German business confidence; the dollar dropped to three-month lows as hopes waned for progress in China-U.S. trade talks at this week’s G20 meeting, while Trump was expected to announce even harsher sanctions against Iran today.
The European Stoxx 600 index fell 0.2%, reflecting losses in Paris and Milan. Stocks in London were little changed. Germany’s export-sensitive DAX fell 0.5% after a profit warning by Daimler caused its shares to drop nearly 5%.
Europe - Woes - Slump - Business - Confidence
Europe's woes were compounded by the latest slump in German business confidence as trade tensions weighed on manufacturers. The June Ifo Business Confidence dropped to 97.4, its lowest level since late 2014, while an index of expectations also worsened, even though the news was largely priced in and the euro barely moved on the news and was up 0.2% at $1.1392 in early trading.
“It could get worse, maybe not much worse but a little,” said Ifo President Clemens Fuest in a Bloomberg Television interview. “It’s justified to at least postpone any tightening of monetary policy. But I don’t think further easing will help very much. Mario Draghi has rightly pointed out that governments need to use other instruments.”
Investors - Presidents - Donald - Trump - Xi
Investors are waiting to see if Presidents Donald Trump and Xi Jinping can de-escalate a trade war that is damaging the global economy and souring business confidence. The leaders will meet during a G20 summit in Japan which starts on Friday. Wall Street also looked in line for more gains after closing lower on Friday. S&P 500 e-minis pointed to a 0.2% rise at the open.
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