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Asian shares slip, looming U.S.-China trade talks in focus

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SYDNEY (Reuters) – Asian shares started the week on the backfoot as investors were unable to shake off worries about global growth, U.S. politics and the Sino-U.S. trade war, keeping the safe-haven dollar well bid near a six-week top against major currencies.

A man sits in front of an electronic board showing stock information at a brokerage house in Hangzhou, Zhejiang province, China December 3, 2018. REUTERS/Stringer

Chinese shares see-sawed on Monday after they resumed trading following a week-long Lunar New Year holiday. The blue-chip index .CSI300 was last up 0.4 percent, Australian stocks were down 0.6 percent while South Korea eased 0.2 percent.

That left MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS off 0.1 percent after it was toppled from a four-month top on Friday.

Trading volumes are expected to be light with Japan on public holiday.

Investors are now looking ahead to trade talks this week with a delegation of U.S. officials travelling to China for the next round of negotiations.

“After we went home on Friday, Asian equities closed the week weaker… reflecting an increased level of apprehension on whether or not the U.S. and China can find an agreement to de-escalate their trade tensions ahead of the March 1st deadline,” said Rodrigo Catril, senior forex strategist at National Australia Bank.

“U.S.-led trade uncertainty along with increasing concerns over the extent of the current global growth slowdown has seen an increase in demand for core global bonds,” Catril said.

“Against a backdrop of uncertainty and despite a Fed that is comfortably on hold, the dollar continues to win the least ugly contest.”

The U.S. Federal Reserve has signalled patience on policy after it delivered four hikes in 2018, citing growing economic risks from a slowdown in global growth.

The dollar index held near a six-week high around 96.625 against a basket of currencies, after notching up its strongest weekly gain in six months as traders piled into the greenback in a safe-haven move. [nL5N2034P4]

The collapse in talks between U.S. Democrat and Republican lawmakers over the weekend amid a clash over immigrant detention policy raised fears of another government shutdown. [nL1N20503N]

That development was yet another worry for markets already under strain from a drumroll of gloomy news on the global economy. Last week, the European Commission sharply downgraded euro zone growth for this year and next and U.S. President Donald Trump added to the anxiety with a declaration that he had no plans to meet with Chinese President Xi Jinping before the March 1 deadline to achieve a trade deal. [nL5N2023IE] [nL1N2020Z6]

“Growth is probably the big area of risk – the U.S. is still on a healthy track but China stabilisation is more hope than reality at the moment while European momentum continues to soften,” JPMorgan analysts said in a note.

“Investors have plenty to be nervous about, including the ongoing growth softness in Europe and the risk this drags the other major geographies down with it.”

The rising pressure on growth means the near term fortunes of the equity markets will partly depend on earnings from major U.S. companies. These include Coca-Cola Co (KO.N), PepsiCo Inc (PEP.O), Walmart Inc (WMT.N), Home Depot Inc (HD.N), Macy’s Inc (M.N) and Gap Inc (GPS.N) for further clues about the health of the consumer sector.

Analysts now expect first-quarter earnings for S&P 500 companies to decline 0.1 percent from a year earlier, which would be the first such quarterly profit decline since 2016, according to IBES data from Refinitiv.

Elsewhere, the euro EUR= was barely changed at $1.1324 after five straight days of losses took it to more than 2 weeks lows. Sterling GBP= dithered at $1.2934.

The Australian dollar AUD=D3 inched up from Friday’s one-month lows although sentiment was still cautious after the country’s central bank opened the door to a possible rate cut. [nL3N2030DE]

Oil prices slipped on concerns about slowing global demand amid a pick-up in U.S. drilling activity. [O/R]

U.S. crude CLcv1 was 73 cents weaker at $51.99 per barrel while Brent LCOcv1 fell 69 cents to $61.41.

Editing by Sam Holmes & Shri Navaratnam

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S&P 500 posts highest close since November 8 on trade optimism

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NEW YORK (Reuters) – The S&P 500 posted its highest closing level since Nov. 8 on Friday as investors clung to signs of progress in the ongoing trade talks between the United States and China.

Investors assessed a slew of headlines on the talks, with top trade negotiators from the two countries meeting to wrap up a week of discussions on some of the thorniest issues in their trade war.

If the two sides fail to reach a deal by midnight on March 1, then their seven-month trade war could escalate.

“People are expecting some sort of positive news on trade and tariffs with China fairly soon,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

“But we won’t know until the end of next week,” he said, and, “there has been a lack of specifics.”

Optimism on the trade front and dovish signals from the U.S. Federal Reserve have driven the recent gains and left indexes well above their lows of December, when the market swooned on fears of an economic slowdown. The S&P 500 is now up about 19 percent since its late-December low.

The S&P 500 technology index was up 1.3 percent, leading gains among the 11 major S&P sectors, while the trade-exposed industrials index climbed 0.6 percent.

The Dow Jones Industrial Average rose 181.18 points, or 0.7 percent, to 26,031.81, the S&P 500 gained 17.79 points, or 0.64 percent, to 2,792.67 and the Nasdaq Composite added 67.84 points, or 0.91 percent, to 7,527.55.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., February 22, 2019. REUTERS/Brendan McDermid

All three indexes registered gains for the week, with both the Dow and Nasdaq posting a ninth week of increases.

The number of New York Stock Exchange and Nasdaq stocks hitting 52-week highs hit 367, the most since mid-September and outnumbered those hitting year lows by the widest margin in six months.

Stocks briefly pared gains after U.S. officials briefed on the negotiations said more time is likely needed in the talks given China’s resistance this week to American demands for specific steps by Beijing to end forced transfers of U.S. technology and certain other policies.

Afterward, President Donald Trump said there was a very good chance the United States would strike a deal with China to end the trade war, and that he was inclined to extend his March 1 deadline to reach an agreement.

“Right now the downside risk has been not as steep, but there’s always a concern that something happens last-minute,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.

“Having a Chinese economy that stabilizes is constructive for global markets,” she said. “That’s what is key in terms of the market looking at the results.”

Kraft Heinz Co tumbled 27.5 percent, and was the biggest drag on the S&P along with a 1.7 percent fall in Class B shares of the company’s controlling stakeholder, Berkshire Hathaway Inc.

The packaged food company posted a quarterly loss, disclosed a Securities and Exchange Commission probe and wrote down the value of its iconic Kraft and Oscar Mayer brands.

Slideshow (2 Images)

Advancing issues outnumbered declining ones on the NYSE by a 2.99-to-1 ratio; on Nasdaq, a 2.45-to-1 ratio favored advancers.

The S&P 500 posted 64 new 52-week highs and three new lows; the Nasdaq Composite recorded 112 new highs and 21 new lows.

About 6.9 billion shares changed hands on U.S. exchanges. That compares with the 7.3 billion-share daily average for the past 20 trading days.

Additional reporting by Shreyashi Sanyal and Sruthi Shankar in Bengaluru; Editing by Chizu Nomiyama and Jonathan Oatis

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FCA sets $14 million annual target compensation for CEO Manley: filing

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FILE PHOTO: Fiat Chrysler Automobiles (FCA) CEO Mike Manley arrives at the memorial service held in honor of former CEO Sergio Marchionne in Turin, Italy, September 14, 2018. REUTERS/Massimo Pinca/File Photo

DETROIT (Reuters) – Fiat Chrysler Automobiles NV (FCA) has set an annual compensation target for Chief Executive Officer Mike Manley consisting of pay, cash and equity bonuses of $14 million, the automaker said in a regulatory filing on Friday.

Manley took over as the head of FCA last July after the abrupt departure of his predecessor Sergio Marchionne. The company paid its new CEO 600,442 euros ($680,240) for 2018 and he will receive a bonus for 2018 of $367,000 to be paid this year.

Manley also was granted FCA 180,364 shares for his work in 2018, which will vest in 2019 if the company meets certain targets. The fair value per share on the date those were granted was $16.61, FCA said.

His target annual compensation consists of a base salary of $1.6 million, and a bonus of $2.4 million and an equity award valued at $10 million, both linked to the company hitting certain performance targets.

Former CEO Marchionne received 6.6 million euros in compensation for 2018, which consisted of nearly 2 million euros in base pay and an annual bonus for 2017 of just over 4.6 million euros.

For the 2014 to 2017 time period, Marchionne also received 2.8 million FCA shares. The fair value per share was $14.84, FCA said.

FCA chairman John Elkann received a base salary of 1.7 million euros and no annual bonus.

Reporting by Nick Carey; Editing by Sonya Hepinstall

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Flattening U.S. yield curve in late 2018 ‘flashing red’ on economy: Fed’s Williams

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President and Chief Executive Officer of the U.S. Federal Reserve Bank of San Francisco, John Williams, addresses a news conference in Zurich, Switzerland September 22, 2017. REUTERS/Arnd Wiegmann/File Photo

NEW YORK (Reuters) – A flattening U.S. yield curve in December, which was close to being inverted, was “flashing red” about a deceleration in U.S. economic growth heading into 2019, despite some solid data at the time, New York Federal Reserve President John Williams said on Friday.

The yield curve flattens as the gap between short and long-dated yields narrow, suggesting investors’ worries about a slowing economy.

The yield curve inverts when shorter-dated yields rise above longer-dated ones. An inverted yield curve has preceded all U.S. recessions in the past 50 years.

Williams was giving closing remarks at a conference about quantitative tools, jointly sponsored by the New York Fed and the Atlanta Federal Reserve.

Reporting by Richard Leong; editing by Diane Craft

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