Trade developments took a backseat to Brexit mayhem on Monday, while investors showed their displeasure with Turkish nepotism, and Elon Musk heads to China. Here are some of the things people in markets are talking about.
U.K. Prime Minister Theresa May battled to stave off a full-blown crisis after three ministers quit within 24 hours to protest her Brexit plan. The resignation of Foreign Secretary Boris Johnson, the face of the campaign to leave the European Union in 2016, compounded the chaos in government following the departures of Brexit Secretary David Davis and his deputy late Sunday. May’s statement to Parliament on Brexit, which was meant to crown a rare compromise deal reached with her divided Cabinet on Friday, was turned into a two-hour defense of her policy of seeking a softer divorce from the EU. The pound fell, reversing earlier gains, on concerns she may face a leadership challenge.
Trump the Optimist
U.S. President Donald Trump said Monday he believes North Korean leader Kim Jong Un will stick to a promise to give up his nuclear weapons despite harsh comments from his government after talks this weekend. “I have confidence that Kim Jong Un will honor the contract we signed &, even more importantly, our handshake,” Trump said in a tweet, while suggesting China may be trying to undermine the agreement. Beijing, he said, “may be exerting negative pressure on a deal because of our posture on Chinese Trade-Hope Not!” New doubts were raised about the fate of the negotiations when North Korea issued a statement via state media describing U.S. demands as “gangster-like” and “cancerous.”
All In the Family
Turkish President Recep Tayyip Erdogan named his son-in-law as economy czar in his new administration, completing a years-long process that saw members of his investor-friendly A-team removed from the government one by one. The lira extended losses after the president’s announcement, falling more than 3%. Berat Albayrak, a former energy minister who entered parliament for the first time in 2015, will be in charge of a new ministry of treasury and finance, combining what used to be the two most powerful economic jobs. He’ll replace Mehmet Simsek, the last man standing from a group of politicians who’ve been trusted by investors over the years to rein in the president’s go-for-growth instincts and keep Turkey’s $880 billion economy on a sustainable path. There was no job for Simsek in the downsized cabinet of 16 ministries.
Musk Heads to Shanghai
Tesla Inc.’s Elon Musk is due to be in Shanghai at an event with the government on Tuesday, according to people familiar with the plans, as the U.S.-China trade war upends the world’s largest market for electric vehicles. The chief executive officer will also visit Beijing on Wednesday and Thursday, said one of the people, who asked not to be identified because the information isn’t public. While details of the trip weren’t immediately available, Tesla has been working on setting up a production facility in China for more than a year. That effort is getting renewed urgency because the U.S. and China have increased tariffs on vehicles.
Stocks Gain, Emerging Markets Rebound
U.S. equities joined a global rally as investors set aside concerns about escalating trade tensions. The S&P 500 rose to the highest since mid-June, while miners and energy shares led the Stoxx Europe 600 to its fifth consecutive advance, the longest winning streak since March. Metals climbed, with gold copper and aluminum all trading higher, and Treasuries sold off. Coming up, China is due to report CPI and PPI. Year-on-year inflation is expected to come in at 1.9%, up slightly from the prior month’s 1.8%. Economists expect PPI to expand 4.5%, from May’s 4.1%. Also on tap are Australian business sentiment figures and trade data from the Philippines.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- Angela Merkel praised China for opening up its markets to foreign investment.
- Eight of the 12 boys trapped in a flooded cave in Thailand have been rescued.
- The world’s largest mobile phone factory is set to open in India.
- Why are young billionaires so boring?
- BMW is planning to boost production in China.
- Xiaomi Corp.’s market debut failed to convince investors that it’s capable of becoming an internet giant.
©2018 Bloomberg L.P.