Five Things You Need to Know to Start Your Day
Five Things You Need to Know to Start Your Day
(Bloomberg) --
Good morning. It's European Central Bank day, the trade war front is looking slightly brighter and Operation Yellowhammer is here for all to peruse. Here’s what’s moving markets.
ECB Day
We don’t always get to say this, but today’s European Central Bank meeting is one to get pulses racing. A rate cut is widely expected, but the question is what will accompany this, including what would likely be a controversial restart to the bank’s bond-buying program and a tiering system that should help to offset some of the pain of negative rates for Europe's banks. Some expect a fairly dovish message from President Mario Draghi, and some think the whole exercise will be pretty ineffective. Also watching closely? Emerging-market bond investors who hope the ECB’s actions will fuel a further rally.
Tariffs and Vaping
It's probably a good time for a quick catch-up with President Trump, leading with the move to postpone the imposition of 5% extra tariffs on Chinese goods by a fortnight. Beyond that, he suggested the Federal Reserve should not only cut interest rates but should also consider negative rates, and it would appear the firing of national security adviser John Bolton was down to a disagreement over easing Iran sanctions. Trump is also said to be considering a possible reduction in the capital gains tax, something he once suggested would be “somewhat elitist,” and he said vaping is a “problem” and his administration will sharply restrict flavored vaping products.
Yellowhammer
It was probably too much to hope that all would be quiet on the Brexit front while Parliament was prorogued. The U.K. government's suspension of Parliament was ruled illegal by a Scottish court on Wednesday, adding yet another layer of uncertainty to the whole situation while a final ruling is awaited on whether MPs will have to come back to Westminster. It's likely folks also will pore over the content of Operation Yellowhammer, the document detailing all the disruption and potential unrest a worst-case scenario Brexit could cause, which was released on Wednesday evening after MPs voted to force the government to release it.
Exchange Bid
Expect another day of discussion about the prospects for Hong Kong Exchanges & Clearing Ltd.’s surprise takeover offer for London Stock Exchange Group Plc. The deal offers the LSE a choice of bulking up itself by pushing ahead with its acquisition of financial data group Refinitiv, or linking up with HKEX to create a global exchange beast to compete with the U.S. giants. Or, we could be looking at a potential bidding war for the LSE if it is indeed open to an offer. All the while, hanging over any deal will be the likelihood of antitrust and political opposition to the LSE being acquired. Lots to keep an eye on.
Coming Up...
Asian stocks rose on the signs of goodwill on trade from both the U.S. and China, and European futures are pointing to a similarly positive open. Oil also pared an earlier slump on the tariff delay. Euro-area industrial production and German and French inflation are all on the way, as is a central bank decision in Turkey where a rate cut that will please the country’s president is widely expected. The World Energy Congress continues and will be watched for any headlines to move the oil price. The earnings calendar is relatively quiet, topped by U.K. retailer Wm Morrison Supermarkets Plc.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- Investors are taking comfort in the arms of data science.
- A giant battery factory is coming to south Australia.
- The most profitable car of 2019.
- Chinese scientists edited DNA in a bid to cure cancer.
- What is negative convexity?
- Harry Potter, James Bond and junk bonds.
- The forgotten era of iPod music.
To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net
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