Five Things You Need to Know to Start Your Day
China may be spared from the next tranche of U.S. tariffs, Morgan Stanley cuts 1,500 jobs globally, and Australia is expected to post the worst profit growth in the region next year. Here are some of the things people in markets are talking about today.
The Dec. 15 deadline for new U.S. tariffs on China is looming. But the U.S. is unlikely to impose extra tariffs on a new $160 billion swath of Chinese goods including toys and smartphones come Sunday, Agriculture Secretary Sonny Perdue said. The impending date is just one of a number of events this week putting concerns over trade back at the forefront for investors and policy makers around the world. “I do not believe those [tariffs] will be implemented and I think we may see some backing away,” Purdue said at a conference in Indianapolis, Indiana Monday. American and Chinese negotiators have signaled that they may be drawing closer to agreeing on phase one of a broader accord that would resolve the trade dispute, while President Donald Trump has said that he wouldn’t mind if it takes until after the 2020 U.S. election.
Asian stocks looked set to dip Tuesday as investors turned cautious ahead of the week’s potential catalysts, from central bank meetings to a looming tariff deadline. Yields on 10-year treasuries edged lower, and futures slipped in Japan, Australia and Hong Kong. The S&P 500 ended at session lows in below-average volumes as investors awaited news on whether Washington will go ahead with a planned Dec. 15 tariff hike. European stocks retreated, and the dollar was lower against major peers. Oil was steady near the highest close since September. Elsewhere, the pound edged higher as polls continued to show the U.K. Conservative Party on course to win a majority in Thursday’s election, which would likely mean Britain leaving the European Union by Jan. 31.
Morgan Stanley is cutting about 1,500 jobs globally, including several managing directors, as part of a year-end efficiency push. The cuts are skewed toward technology and operations divisions, but also include executives in sales, trading and research operations, people with knowledge of the matter said. The reductions amount to about 2% of the firm’s workforce. The bank plans to take a charge in the range of $150 million to $200 million in its fourth-quarter results tied to the cost of the cuts. Investment banks around the world — including Citigroup and Deutsche Bank — have been trimming staff amid a multiyear slump in trading revenue and the expectation that more of the business will move to electronic platforms that require fewer humans.
Goldman Sachs is jumping into the WeWork cleanup. SoftBank tapped Goldman for new financing to help revive one of its biggest bets — an investment in office-sharing company WeWork. The investment bank is arranging a $1.75 billion line of credit, the first step in SoftBank’s pledge to put together $5 billion in debt financing for WeWork as part of its bailout package, according to people with knowledge of the matter. In a twist aimed at making the financing more palatable to other lenders, SoftBank will be listed as the borrower and WeWork will be a co-borrower. The Wall Street firm reached out to other banks to gauge their interest in participating in the facility, structured as letters of credit, with the goal of putting it in place before the end of the year.
Australia is expected to post the worst profit growth in Asia next year, thanks to a weak domestic economy stoking consumer caution and a banking sector dealing with a litany of scandals. But how bad is bad? Earnings for the S&P/ASX 200 Index are seen rising 4.2%, less than half the increase that MSCI’s broadest measure for Asian stocks is expected to achieve, according to data compiled by Bloomberg. Australia’s benchmark index reached a record high last month and is tied with Taiwan as the region’s second-best performer in 2019. Record low interest rates have helped prop up the benchmark index and overshadowed troubling economic signals for corporate Australia, said Aaron Binsted, a portfolio manager at Lazard Asset Management. The nation’s economy slowed last quarter as cuts to mortgage rates and taxes failed to spur household spending, which grew at its slowest pace in a decade.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- Japanification is the scourge threatening to go global in 2020.
- Five dead, eight missing after a New Zealand volcano erupts.
- North Korea takes a rather personal swipe at Trump.
- Australia’s first carbon-neutral equities fund is delivering gains of 24%.
- “Fangirls” defend China from Hong Kong protesters and the world.
- A second executive has been fired at BlackRock after an office romance.
- Vietnam’s richest man bets $2 billion to sell cars to Americans.
- These are Asia’s best business schools.
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