? South Africa enters into recession.
? Dollar rallies, Treasurys dip ahead of U.S. manufacturing data.
? Brent crude oil climbs.
? Bank of England's chief to appear before U.K. lawmakers.
The dollar traded higher against other currencies as emerging markets remained under pressure amid continuing economic woes in countries such as Turkey and Argentina.
In South Africa, the rand plunged 2.20% against the dollar as of 6:53 a.m. ET after the country's statistics agency said the economy slipped into a recession for the first time since the global financial crisis, after recording a second consecutive quarterly GDP contraction. The Argentine peso, meanwhile, remains in the spotlight after the government announced changes to export taxes and other austerity measures.
Sterling slipped 0.37% as investors await Bank of England Governor Mark Carney's testimony later today before the House of Commons' Treasury Select Committee amid speculation that he may extend his tenure as central bank chief, though the British government denied the rumors. Changes at the helm of the BoE is unlikely to be a game-changer for U.K. markets given the intense influence that Brexit is commanding over the economy, central bank policy and financial assets, according to strategists at ING Research.
The Australian dollar fell 0.50% against its U.S. counterpart as the Reserve Bank of Australia maintained its key rate for the 25th straight month. The euro depreciated 0.53% and the yen fell 0.30%, while the Chinese yuan ticked up 0.02%.
Gains in the yuan extended to equities, with the Shanghai SE Composite index and Hong Kong's Hang Seng shrugging off lingering trade tensions between China and the U.S., to close higher amid reports that the Chinese government is considering a merger between state-owned mobile carriers China United Network Communications Ltd. and China Telecom Corp. Ltd.
Public comments on U.S. President Donald Trump administration's proposed 25% tariffs on $200 billion of imports from China will end Thursday.
European indexes mostly diverged from Asian peers, with the FTSE 100 dipping 0.29% and the Euro Stoxx 50 down 0.96%. Shares in Société Générale SA rose more than 1% in Paris as the lender nears a settlement with U.S. authorities to resolve sanctions-related charges, while shares in U.K. advertising company WPP PLC were down more than 6%, having yesterday named a new CEO and reported first-half earnings.
Brent crude oil surged 1.77% to $79.53 per barrel on the ICE Futures Exchange as two Gulf of Mexico oil platforms were evacuated due to growing threats of a tropical storm, Reuters reported.
Treasurys dipped as 10-year yields rose over 1 basis point to 2.873% ahead of U.S. manufacturing data. "With growth in manufacturing output having already slowed quite sharply in recent months, amid the moderation in global trade and surge in the dollar, that would provide further evidence that the outlook for the factory sector is deteriorating," said Andrew Hunter of Capital Economics.
Ten-year yields on German Bunds gained over 1 basis point to 0.347%. Italian government bonds rose as 10-year yields shed over 8 basis points to 3.086% as senior officials from the League party are set to discuss the national budget with their leader, Deputy Prime Minister Matteo Salvini.
Gold fell 0.59% to $1,194.24 per ounce.
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The day ahead:
9:45 a.m. ET — U.S. PMI manufacturing index (Econoday consensus: 54.5)
10 a.m. ET — U.S. ISM manufacturing index (Econoday consensus: 57.6)
10 a.m. ET — U.S. construction spending (Econoday consensus: 0.4% monthly)
11 a.m. ET — Global manufacturing PMI
8:30 p.m. ET — Japan PMI composite
9:45 p.m. ET — China general services PMI