Bear Market Blues: 5 Things The Global Markets Are Talking About Today

Trade talks, tariffs threats, emerging market contagion fears and central bank decisions are dominating asset price moves this month. Adding in geopolitical risks and U.S. impeachment possibilities, market volatility is expected to remain elevated for the foreseeable future.

Global equities traded mixed overnight as investors await the latest word on trade wars and today's payroll reports from the U.S. and Canada. Emerging market equities notably snapped a week of declines while their currencies rallied.

On Sunday, there is the Swedish general election and the market will be interested in the growth of the right wing. The "hard" right party is expected to pull about 20 percent of the vote. While that would make it one of the largest single parties, others are in coalitions and center-right and center-left expected to achieve 40 percent each.

With this in mind, here are five things the global markets were talking about Friday morning.

1. Global Stocks Mixed

U.S. equity futures were little changed ahead of NFP, following a mostly negative session in Asia, where stocks closed out the worst week in six months.

In Japan, the Nikkei continued its slide for a sixth consecutive session, dropping to a 3-week low as investors sold chip equipment makers and on concerns that President Trump could be contemplating taking on Japan over trade. The benchmark share average dropped 0.8 percent. For the week, the Nikkei plummeted 2.4 percent, its biggest weekly fall in six months. The broader Topix declined 0.5 percent.

Down under, Australian stocks fell again overnight for a seventh consecutive session on the back of the possibility the Sino-U.S. trade war could escalate any time. The S&P/ASX 200 index was down 0.3 percent at the close. For the week, the index shed 2.8 percent. In South Korea, stocks tumbled 0.26 percent overnight and are down 1.8 percent on week.

In Hong Kong, stocks ended flat overnight as investors fear new U.S. tariffs. The China Enterprises Index closed 0.18 percent lower.

In China, shares edge higher in cautious trade as tariff comment deadline expired. At the close, the Shanghai Composite index was up 0.4 percent. The index was down 0.8 percent for the week, while the blue-chip CSI300 index ended 0.45 percent higher, but was down 1.7 percent for the week.

2. Oil Steady As Crude Inventories Fall

Oil prices are little changed despite a fall in U.S. crude inventories to the lowest levels in three years, although Sino-U.S. trade tensions and economic weakness from emerging markets remain a concern.

Brent crude futures are up at $76.58 a barrel, while U.S West Texas Intermediate crude is at $67.93 per barrel, up 16c from Thursday's close.

According to the EIA's report yesterday, U.S. commercial crude oil inventories fell by 4.3 million barrels to 401.49 million barrels in the week to August 31, the lowest since February 2015.

Despite that, crude prices have been limited by a rise in refined product stocks and a relatively weak U.S. driving season. Also not helping is the ongoing emerging markets weakness. Investors can expect potential new U.S. import tariffs on Chinese goods to continue to weigh on oil market sentiment.

Ahead of the U.S. open, gold has extended its gains overnight as the U.S. dollar fell against the yen on news that President Trump would next take up trade issues with Japan, while investors feared another round of tariffs at any moment.

Spot gold was up 0.1 percent at $1,200.88, after printing a weekly high Thursday at $1,206.98. U.S. gold futures have rallied 0.2 percent to $1,206.40 an ounce.

3. Italian Yields Fall

Italy's borrowing costs have fallen to a monthly low this morning and the best week for prices in three months, thanks to easing concern over fiscal spending worries from the new anti-establishment government.

Short-dated Italian BTP yields fell more than 50 bps this week after reassuring comments from Rome that the sitting government would respect E.U. rules on fiscal discipline.

Elsewhere, the yield on 10-year Treasuries nudged up 1 bps to 2.88 percent. In Germany, the 10-year Bund yield held at 0.36%, followed by the 10-year Gilt yield holding at +1.416%.

4. Dollar waits for NFP

Friday's jobs report showed the economy adding 201,000 jobs versus economists' 190,000 estimate, which could bode well for the U.S dollar, especially against emergin market currencies and riskier developed market currencies like the AUD, a proxy for China.

With no sign of a U.S slowdown, the data will likely give President Trump ground to proceed with his trade tactics and keep the Fed on its steady rate-hiking path.

5. Eurozone Economic Growth Falls Further Behind U.S.

Data Friday morning showed that the Eurozone's economy slowed slightly in Q2, as imports jumped despite weak household spending.

The E.U. statistics agency said Q2 GDP was 0.4 percent larger than Q1, and up 2.1 percent for the same period last year. It is the equivalent of an annualized rate of 1.5 percent, just below the 1.6 percent rate of expansion recorded in Q1.

The loss of momentum stands in contrast with the U.S. (at 4.2 percent), where growth has surged in the same time period due to a package of tax cuts and government spending increases.

Related Links:

Height Securities: Latest China Tariffs Could Be Enacted As Soon As Late September

Oil Slumps Despite Big Stock Draw, Fuel Supplies To Blame