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North Korea pledges denuclearization, Southeast Asian stocks are set for their worst rout since 2016, and T-Mobile and Sprint in a mega deal. Here are some of the things people in markets are talking about.
Kim’s Charm Offensive
North Korean leader Kim Jong Un plans to invite foreign journalists to witness the shutdown of North Korea’s main nuclear weapons test site in May, South Korean President Moon Jae-in’s spokesman told reporters on Sunday. The charm offensive ahead of Kim’s summit with Donald Trump adds pressure on the U.S. president to ease sanctions against North Korea even before it’s made any significant concessions. Meanwhile, Secretary of State Mike Pompeo said he assessed Kim during their meeting ahead of the planned summit with Trump, and concluded that there’s at least a chance for the U.S. to strike a denuclearization deal. Meanwhile, here's a list of the stocks to watch following the announcement.
$26.5 Billion Carrier Deal
T-Mobile US Inc. agreed to acquire Sprint Corp. for $26.5 billion in stock, a wager that the carriers can team up to build a next-generation wireless network and get a jump on industry leaders Verizon Communications Inc. and AT&T Inc. The deal follows years of will-they-won’t-they deliberations between Deutsche Telekom AG, the German company that controls T-Mobile, and SoftBank Group Corp., the Japanese owner of Sprint, and comes about five months after an earlier merger attempt collapsed. The combination reduces the wireless industry to three major competitors from four, ensuring heavy scrutiny from regulators.
Southeast Asian Stock Rout
After climbing to records this year, equities in Vietnam, the Philippines and Indonesia are now looking less like the bets that made them global winners. The MSCI Asean Index is poised for its longest losing streak since an 8.4 percent, four-month rout that ended in November 2016. Investors who bought Southeast Asian stocks seeking shelter from U.S.-China trade war tensions now face domestic issues that have dragged regional markets amid a surge in U.S. Treasury yields.
The Federal Reserve is expected to keep rates unchanged this week, but investors will be watching for commentary on Treasury yields and GDP. Personal spending probably accelerated in March, while the PCE core deflator is expected to pick up to 2 percent from 1.8 percent. Manufacturing may have expanded at a slower pace in April. Nonfarm payrolls probably accelerated in April, and the jobless rate is forecast to fall to 4 percent. In China, April PMI will give one of the first readings on second-quarter growth. Bloomberg Economics expects a moderation in momentum, with deleveraging efforts weighing on domestic demand and trade friction on exports. Consensus is for the manufacturing index to drop to 51.3 from from 51.5 and the non-manufacturing to 54.5 from 54.6. Also this week, South Korean industrial output is out and the Reserve Bank of Australia is expected to hold rates for the 20th straight meeting. Apple Inc. dominates the week in earnings when it reports on Tuesday.
Mixed Start to Trading
Futures point to a muted start to trading in Asia with Japan closed for the better part of the week for holidays and China shut Monday and Tuesday. Contracts on Hong Kong’s Hang Seng Index and South Korea’s Kospi index gained, while they were flat for Australian equities. Most U.S. stocks edged higher on Friday as the debate continued over whether better-than-forecast corporate earnings are enough to offset signs the economy may be cooling. Yields on benchmark Treasuries declined for a second day after reaching a more than four-year high.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- Goldman Sachs sees the Australian dollar falling to 72 cents.
- Malaysia’s election will be complicated by a jump in candidates for individual seats.
- China issues rules for securities ventures by foreign firms.
- Theresa May ally Amber Rudd quit as U.K. Home Secretary.
- Emerging-markets traders beholden to U.S. yields.
- Chinese smartphone maker Xiaomi Corp. said to be preparing $10 billion Hong Kong IPO.
- Disney’s Avengers’ record weekend debut.
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