Five Things You Need to Know to Start Your Day
Five Things You Need to Know to Start Your Day
(Bloomberg) --
Good morning. The U.S. dropped its label of China as a currency manipulator, the pound steadied after slumping on Monday and big U.S. banks start reporting earnings. Here’s what’s moving markets.
Label Dropped
The Trump administration lifted its designation of China as a currency manipulator in an important change to the U.S. stance that should give investors further confidence in relations between Washington and Beijing. “China has made enforceable commitments to refrain from competitive devaluation, while promoting transparency and accountability,“ Treasury Secretary Steven Mnuchin said in a statement, ahead of the scheduled signing of the phase one trade deal on Wednesday.
Pound Steadies
The pound steadied against the dollar overnight, after sliding Monday following Bank of England policymaker Gertjan Vlieghe’s comments on the potential for more stimulus, in addition to gross domestic product numbers that showed the economy contracted in November. Money markets priced in a 50% chance of a rate cut this month, up from 25% on Friday, based on the remarks, with gilt yields sliding. But here’s why the central bank might be setting itself up for a policy mistake if it does cut too soon.
Stocks Trim Gains
Asian stocks trimmed earlier gains as data showed Chinese trade with the U.S. dropped almost 11% in 2019, crimped by the trade war. Equities had risen earlier on the change in the U.S. stance on China, while technology shares sent the S&P 500 and Nasdaq Composite benchmarks to record highs in New York. While European stocks mainly slipped on Monday, there’s a potentially bullish indicator coming from fixed income as German bond yields creep back toward positive territory, in a possible sign that investors are more buoyant about the state of the region’s economy.
Big Banks
Earnings reports start flowing today from big U.S. banks, with Citigroup Inc. and JPMorgan Chase & Co. due out. Analysts expect the sector to see a combined profit drop of $10 billion this year, as global interest rates remain low and geopolitical tensions high. That said, quarterly trading revenue could be a bright spot amid a weak comparative given the market turmoil that took a toll on the industry at the back end of 2018, if you can remember that far back. European peers don’t start reporting until the end of the month.
Coming Up…
In European earnings, we’ll get numbers from FTSE 100 home-builder Taylor Wimpey Plc and Swiss chocolatier Lindt & Spruengli AG, among others, while better-than-expected results from German chipmaker Dialog Semiconductor Plc could boost tech today. Elsewhere, it’s worth noting that the European Union’s new trade chief will be in Washington for talks for the next three days, with both sides having recently revived old disputes and triggered new ones as a result of fundamental disagreements over trade policy.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- Dutch marijuana growers leave for North America.
- JPMorgan trader put on leave over WhatsApp use.
- 47.2 years old is peak misery, study shows.
- Retired pope warns against relaxing celibacy rules.
- Joker leads Oscar nominations.
- Aston Martin rescue money may prove temporary.
- Manchester United risks losing its position as England’s top-earning soccer club.
To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net
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