Five Things You Need to Know to Start Your Day
China cuts reserve ratio as tensions with U.S. flare, far-right candidate closes in on Brazil presidency, and market pressure mounts on Italy. Here are some of the things people in markets are talking about today.
China’s central bank reduced the amount of money lenders must hold as reserves for the fourth time this year, a move which will release a total of 1.2 trillion yuan ($175 billion), as policy makers move to shore up the faltering domestic economy. Equities in Shanghai dropped 3.7 percent as the market reopened from a week-long holiday and foreign investors rushed for the exits. The move comes as the stand-off with the U.S. shows little sign of easing after Secretary of State Michael Pompeo cited “fundamental disagreement” with China’s foreign minister during an exchange in Beijing.
Jair Bolsonaro came close to reaching the 50 percent required in yesterday’s election in Brazil that would have seen him win the presidency without the need for a runoff vote. The far-right candidate, who ended up with 46.2 percent of first-round votes, will now face the leftist Fernando Haddad on Oct. 28. Brazilian assets trading in Europe advanced this morning as investors view Bolsonaro as the most market friendly candidate.
On the attack
Italy’s populist government was on the attack against the European Union again this morning, with Deputy Prime Minister Matteo Salvini calling Jean-Claude Junker and Brussels bureaucrats the real enemies of Europe as he attended an event in Rome with France’s Marine Le Pen. The bond market is not reacting well to the government’s hardline position, with yields on the country’s 10-year bond climbing above 3.5 percent for the first time in four years.
Overnight the MSCI Asia Ex. Japan Index fell 1.2 percent, with equity gauges lower in most countries in the region. Japan’s markets were closed for a holiday. In Europe, the Stoxx 600 Index was 0.6 percent lower at 5:50 a.m. Eastern Time as a sell off in Italian stocks helped drag equities lower across the region. S&P 500 futures pointed to a lower open, the U.S. bond market is closed for a holiday, and gold was lower.
The 2018 Sveriges Riksbank Prize in Economic Sciences has gone to William Nordhaus and Paul Romer for work on climate change and innovation. The two “have designed methods for addressing some of our time’s most basic and pressing questions about how we create long-term sustained and sustainable economic growth,” the academy said.
What we've been reading
This is what's caught our eye over the weekend.
- Odd Lots: What two years of IPO drama reveals about Saudi Arabia’s future.
- Kavanaugh fight ignites passions for both parties in midterms.
- Scientists call for $2.4 trillion shift from coal to renewables.
- Climate change will get worse. These investors are betting on it.
- Trump’s sanctions tested as U.S. retreats from Rusal penalty.
- Taylor Swift picks a side.
- Voyager 2 could be nearing inter-stellar space.
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