➤ Response to China "decoupling" reports seen as partial denial.
➤ Chinese stocks fall, as manufacturing sector contracts for 5th straight month.
➤ Swiss franc declines over recession risks.
Wall Street opened higher, though Chinese stocks fell as speculation that the U.S. was contemplating delisting Chinese firms risked complicating trade talks.
The S&P 500 and Nasdaq 100 gained 0.3% around 9:30 a.m. ET. The FTSE 100 slipped 0.2%, while France's CAC 40 edged up 0.2% and Germany's DAX index ticked up 0.1%.
The U.S. Treasury denied that the Trump administration is considering forcing Chinese companies to delist from U.S. exchanges, following reports that the U.S. was looking into ways to restrict U.S. investors' portfolio flows into China, including limiting the exposure of U.S. government pension funds to the Chinese market.
The Chinese Foreign Ministry reportedly said that any such move could rattle financial markets and threaten global economic growth and trade.
While the Treasury said the U.S. is not contemplating the move "at this time," the rumors could increase pressure on China to reach a deal, according to MUFG Bank, which, citing the U.S.-China Economic and Security Review Commission data, said 156 Chinese companies with a total market capitalization of $1.2 trillion were listed on the biggest U.S. stock exchanges.
Chinese Vice Premier Liu He and other officials are expected to visit Washington on Oct. 10-11 for trade talks.
A comprehensive trade deal between the world's two largest economies seems unlikely due to structural issues to be resolved, said Mitul Kotecha, senior emerging markets strategist at TD Securities.
Win Thin, global head of currency strategy at Brown Brothers Harriman, said talks have been made "even more difficult."
S&P Global Ratings lowered its growth forecasts for the U.S. to 2.3% from 2.5% for 2019 and to 1.7% from 1.8% for 2020, citing trade tensions.
Hong Kong's Hang Seng index added 0.5% on Sept. 30, while the Shanghai SE Composite dropped 0.9% as Chinese manufacturing activity contracted for the fifth consecutive month in September, though the reading was stronger than expected and higher than August's print.
Japan's Nikkei 225 index closed 0.6% lower as factory output in the country unexpectedly declined in August, while retail sales recovered.
Among currencies, the dollar index gained 0.3%.
The euro slipped 0.4% against the dollar as the unemployment rate in the eurozone dropped to the lowest rate in the euro area since May 2008. Swiss franc lost 0.6% as Switzerland was said to be preparing for potentially slipping into recession amid fears of a global downturn.
Sterling gained 0.1% against the dollar as Chancellor of the Exchequer Sajid Javid reportedly plans to set aside £16.6 billion for a no-deal Brexit. In addition, the U.K. economy contracted 0.2% on a quarterly basis in the second quarter, following a revised 0.6% expansion in the first quarter.
The Japanese yen slipped 0.1% and Chinese yuan retreated 0.3% versus the dollar.
In the debt market, Treasurys and German Bunds yields rose 2 basis points and 1 basis point, respectively, around 9:30 a.m. ET.
Among commodities, Brent crude fell 1.4% to $61.03 per barrel on the ICE Futures Exchange and gold dropped 1.2%.
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The day ahead:
9:45 a.m. ET — Chicago PMI (Econoday consensus: 50.4)
10:30 a.m. ET — Dallas Fed manufacturing survey (Econoday consensus: 1.0)
