GLOBAL MARKETS-Global stocks weighed down by concerns over trade, Italian budget

By David Randall
NEW YORK, May 28 (Reuters) - A slight gain in benchmark U.S.
indices early on Tuesday was not enough to turn global stock
markets higher as concerns about Italy's budget and the fate of
U.S.-China trade talks continued to weigh on investor sentiment.
Markets had been cheered by limited gains for nationalists
in the EU elections, though wins for euroskeptic parties in
Italy, France, Poland and would-be ex-member Britain, as well as
snap elections in Greece and political turmoil in Austria,
curbed risk appetite. Italy's dispute with the European Commission, however,
emerged to dominate European trading as markets opened. The
Commission could fine Italy 3 billion euros for accumulating
debt and deficits that break EU rules, Italian Deputy Prime
Minister Matteo Salvini said on Tuesday. "It reopens the whole agenda of whether Salvini wants to be
part of the euro or not," said Colin Harte, portfolio manager
and strategist at BNP Paribas Asset Management.
"The danger is that the (dispute between Salvini and the EU)
turns out to be more aggressive on both sides, then you will see
people switch out of positions," Harte said.
In the United States, the Dow Jones Industrial Average
.DJI rose 66.29 points, or 0.26%, to 25,651.98, the S&P 500
.SPX gained 6.54 points, or 0.23%, to 2,832.6 and the Nasdaq
Composite .IXIC added 33.72 points, or 0.44%, to 7,670.72.
The pan-European STOXX 600 index .STOXX lost 0.06% and
MSCI's gauge of stocks across the globe .MIWD00000PUS gained
0.12%.
High-grade euro zone bond yields were lower across the board
in a risk-off environment, with the ousting of Austrian
Chancellor Sebastian Kurz adding to nervousness. U.S. yields were also lower. Benchmark 10-year Treasury
notes US10YT=RR yielded 2.27%, down five basis points.
Trade worries remained high. U.S. President Donald Trump
said on Monday that Washington was not ready to make a deal with
China, but that he expected one in the future. At the same time,
he pressed Japanese Prime Minister Shinzo Abe to reduce Japan's
trade imbalance with the United States. Hope for a U.S.-China trade agreement still underpins
optimism in global markets.
"Markets are holding their nerve and will start to attach
great hope to the meeting between Presidents Xi and Trump in
June," said BNP Paribas' Harte. "But I'm not as convinced that
Trump wants a deal.
"The big risk is that the U.S. starts being disruptive to
supply chains... and the big problem is we don't really
understand how much damage this will do."
Auto stocks rose globally after Fiat Chrysler FCHA.MI
confirmed it had proposed a merger with Renault RENA.PA , a
deal that would create the world's third-biggest carmaker. The
rally spilled into Asia with Mitsubishi Motors Corp 7211.T in
Japan adding 5.95% and Nissan Motor Co 7201.T gaining 2.31%.
The dollar index .DXY , which tracks the U.S. currency
against a basket of six other major currencies, rose 0.17%
higher at 97.782.
In commodity markets, oil prices extended gains after rising
more than 1% on Monday. Prices rose on tensions in the Middle
East and continuing Russian supply disruptions after a
contamination problem discovered last month. Brent crude LCOc1 was 0.31% higher at $70.33 per barrel,
having earlier dipped below the $70 mark. U.S. West Texas
Intermediate crude CLc1 gained 1.16% to $59.31 per barrel.


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Global assets in 2019 http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Global bonds dashboard (DO NOT USE UNTIL UPDATE FOUND) http://tmsnrt.rs/2fPTds0
Emerging markets in 2019 http://tmsnrt.rs/2ihRugV
MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
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