President Donald Trump’s weekend threats to leave Canada out of the new North American Free Trade Agreement weighed on European and Asian stocks Monday. Some investors were looking at the Nafta renegotiation as a bellwether for how far the U.S. is willing to take its trade spat with China. Car makers in the Stoxx Europe 600 were the worst performing sector in Europe and fell 1%, even as the broader index closed up 0.1%. Shares of Volkswagen, BMW and Daimler, which have car factories in the U.S. and Mexico, led the losses in Germany’s export heavy DAX, which fell 0.1%. U.S. markets were closed for Labor Day. Concerns about a global trade conflict have dented equity markets in Europe and Asia over the past few months, but also helped U.S. stocks to reach record highs, boosted by risk-averse money. The U.S. employment report for August, due Friday, will give further clues on the strength of the U.S. economy.
Copper prices fell, as lackluster Chinese manufacturing data fueled concerns about the country’s economy amid speculation the U.S. will ramp up tariffs on Chinese imports as soon as Thursday. The base metal dropped by 0.18% to $5.979.50 a metric ton in late morning trade. Gold, meanwhile, edged up 0.02% to $1,201.23 a troy ounce, even as the dollar climbed against most of its peers. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, rose 0.09%.
IRON ORE: 65.93s + 0.10 (October contract)
Oil prices started September higher as investors refocused on looming risks to Iranian supply, despite signs of rising output from the U.S. Brent crude, the global benchmark, closed up 0.66% to $78.15 a barrel on London’s Intercontinental Exchange . On the New York Mercantile Exchange, West Texas Intermediate futures were 0.19% higher at $69.93 a barrel. Officials at Iran’s state-run National Iranian Oil Co. provisionally expect crude shipments to drop to around 1.5 million barrels a day in September, down from around 2.3 million barrels a day in June, according to people familiar with the matter. President Trump’s decision in May to pull the U.S. out of a 2015 international agreement to curb Iran’s nuclear program set the stage for the reimposition of economic sanctions, with measures targeting Iran’s oil industry set to take effect in November.
The WSJ Dollar Index, which tracks the U.S. dollar against a basket of currencies, rose 0.1%. Inflows into U.S. assets, however, have hurt emerging-market countries that are highly dependent on the dollar and foreign finance, chiefly Turkey and Argentina. Money managers are concerned about these issues spreading further. The Turkish lira was down 1.5% against the dollar, recovering from deeper falls earlier in day after the Turkish central bank said it would take action again in this month’s policy meeting, adding that officials “will take the necessary actions to support price stability.” That came after fresh economic data showed that Turkish inflation in August rose to almost 18%, albeit lower than investors were expecting. But many investors think it is unlikely that developing-market woes will grow large enough to affect U.S. growth through weaker demand for its exports. Argentina’s embattled government said that it will impose a temporary tax on exports and enact other measures to try to regain investors’ confidence and convince the International Monetary Fund to speed up the disbursement of financial aid the country could need to make debt payments next year. The Argentine peso weakened against the dollar in light trading during the Labor Day holiday in the U.S. after Mr. Dujovne announced the details of the austerity plan, reaching 38.5 to the dollar at midday after closing at 36.9 to the dollar on Friday.
Turkey Central Bank Vows to Take Action After Inflation Hits 18% Soaring inflation is putting pressure on Turkey’s central bank to raise interest rates next week, even as investors and analysts questioned whether the institution will defy President Recep Tayyip Erdogan’s demand to keep cheap credit flowing to the Turkish economy. Sherwin Williams Lands in Trouble Over 114-Year-Old Paint Ad When companies get in trouble over their advertisements, it usually happens quickly. In the case of Sherwin-Williams, it took more than a century. Companies Ramp Up Worker-Retraining Efforts Many U.S. companies retraining less educated workers for more sophisticated tasks. Two-thirds of manufacturers plan to increase training in the next year, according to a report from the National Association of Manufacturers, and President Trump signed an executive order in July to explore ways to encourage investment in job oriented training programs.
Stock markets in Asia-Pacific were also weaker, with Japan’s Nikkei Stock Average closing down 0.8%, Hong Kong’s Hang Seng falling 0.6% and Australia’s S&P ASX 200 dropping 0.1%. China’s stock markets have had a dismal year, with the Shanghai Composite recently falling below its lowest closing level of 2016, when global stock markets trembled at the prospect of a large yuan devaluation.