Five Things You Need to Know to Start Your Day
Stocks got whipsawed during the U.S. day amid concerns about global growth. Here are some of the things people in markets are talking about.
Stocks Edge Higher
Asian equities look set for a mixed open after U.S. shares fluctuated Wednesday, ultimately edging higher after whipsawing investors throughout the day amid the ongoing debate over the outlook for global growth. The dollar’s six-day rally stalled and crude oil dropped after an earlier increase. The S&P 500, Dow and Nasdaq all turned green in the last hours of trading. Stock had initially rallied in the wake of a spate of better-than-forecast quarterly earnings from IBM, Procter & Gamble and United Technologies before dropping into the red mid-session. White House Council of Economic Advisers Chairman Kevin Hassett said that if the partial government shutdown extends through March, there’s a chance of zero economic expansion this quarter, though “humongous” growth would follow once federal agencies reopen.
China Pledges Sustainable Growth
China’s vice president said the world’s second-largest economy has delivered “significant” growth and pledged to the World Economic Forum in Davos, Switzerland, that it won’t falter. “There will be a lot of uncertainties in 2019, but something that is certain is that China’s economy, China’s growth, will continue and will be sustainable,” Wang Qishan said in response to a question after a making a keynote speech to business leaders Wednesday. Wang’s comments followed a government report Monday that gross domestic product expanded 6.6 percent last year, the slowest pace since 1990 and in line with estimates. “This is a pretty significant number, not low at all,” Wang said.
Aussie “Doom Loop”
The beleaguered Australian dollar faces a growing threat: an addiction to real estate is creating a debt mountain. After being the worst-performing developed-nation currency in 2018, the Aussie is set to extend losses this year as rising indebtedness at households and the economy overall make it more likely the Reserve Bank of Australia will cut interest rates, according to both HSBC Holdings Plc and Rabobank. HSBC sees a further 7 percent slide to 66 U.S. cents by year-end, while Rabobank tips 68 cents. “The RBA just sat there watching the housing bubble grow for the past couple of years,” said Michael Every, head of Asia financial markets research at Rabobank in Hong Kong. “You’re in a doom loop. Now that the Federal Reserve is finally on hold, the RBA can finally talk about cutting again -- and they will.”
More P2P Problems
First came a sweeping government crackdown and a surge in defaults and failures at thousands of China’s peer-to-peer lenders. Now, in another troubling sign for the industry, some of the biggest investment banks have stopped taking them public. Wall Street firms including Goldman Sachs Group Inc. and Citigroup Inc. walked away from U.S. initial public offerings of Chinese P2P lenders in recent months, people with knowledge of the matter said. Their concerns mainly stemmed from the timing of the deals, with an uncertain outlook for P2P companies and a slumping market knocking down valuations. In each case, the businesses went ahead with their offerings after finding new underwriters. The rare show of concern by major banks highlights the plight of a P2P industry that’s seen thousands of companies shuttered in the past year.
U.S. Shutdown Feud Deepens
U.S. House Speaker Nancy Pelosi said she won’t let President Donald Trump give his State of the Union address in her chamber unless government agencies have been reopened, a further escalation of the feud between the two leaders. In a letter to Trump on Wednesday, the speaker said that when she invited the president to give the address on Jan. 29, "there was no thought that the government would still be shut down." The Democratic-controlled House and the Republican-controlled Senate must pass a joint resolution to allow Trump to deliver the speech to a joint session of Congress. The House won’t consider such a resolution, Pelosi said in her letter. The resolution is usually a routine formality taken shortly before the event.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- Citadel’s Ken Griffin just bought the most expensive home in America.
- Davos elites rush to the barricades.
- Abe presses Davos crowd to rebuild trust in free trade.
- The rich are getting richer, and younger.
- Zermatt’s $60 million, glass-bottomed, crystal encrusted gondola.
- Why Thailand’s Junta is finally ready for an election.
- A key Bitcoin ETF application is pulled.
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