A man cycles past the national flag of the Kingdom of Saudi Arabia in Dhahran, Saudi Arabia. (Photographer: Simon Dawson/Bloomberg)

Five Things You Need to Know to Start Your Day

(Bloomberg) --

Saudi Arabia’s Khashoggi account doubtful, China markets in focus after government assurances and the European Central Bank holds a key policy meeting. Here are some of the things people in markets are talking about today.

Ties That Bind

Saudi Arabia’s evolving account of the death of journalist Jamal Khashoggi -- which the kingdom’s foreign minister on Sunday cast as a “tremendous mistake” perpetrated by a “rogue operation” -- has elicited skepticism from officials in the U.S. and its allies as they weigh how to respond. France demanded more information, while Germany put arms sales to the oil-rich nation on hold. Republican and Democratic lawmakers said they suspected knowledge of the killing reached the highest levels of the Saudi regime. Meanwhile, Treasury Secretary Steven Mnuchin emphasized the importance of the U.S.’s economic ties with Saudi Arabia, reinforcing the Trump administration’s priorities. Mnuchin canceled his participation in a Saudi investment conference this week. 

`Unwavering’ Support

Chinese President Xi Jinping vowed “unwavering” support for the country’s private sector, the latest response from Beijing to concern over the outlook for the economy. “Any words and practices that negate and weaken the private economy are wrong,” Xi said in a letter to private entrepreneurs, Xinhua News Agency reported Sunday.  He went on to say that ``supporting the development of private enterprises is the Party Central Committee’s consistent policy.”  The remarks came after top officials moved to shore up confidence with a rare show of coordinated comments on Friday. China has been facing increasing headwinds this year, including trade tensions with the U.S. and a slumping stock market. The economy grew at the slowest pace since early 2009 in the third quarter, while the stock market has lost more than $3 trillion in value since late January.

Coming Up... 

The coming week brings a pivotal European Central Bank meeting Thursday as policy makers begin to scale back asset purchases. Saudi Arabia’s  ``Davos in the Desert'' kicks off amid an exodus of many movers and shakers following the death of the dissident journalist. It’s a mega week for tech earnings, with Amazon, Alphabet, Microsoft and Intel all due to report. Tuesday, Bank Indonesia's rate decision will garner plenty of interest. While policy makers are expected to hold rates, the rupiah's tumble this year will have FX traders poring over every utterance from Governor Warjiyo. Among key data highlights this week, Singapore and Hong Kong CPI are due Tuesday and Japan's flash manufacturing PMI Wednesday. Thursday’s list includes New Zealand trade data and South Korean third-quarter GDP.  The U.S. releases the Fed Beige Book, Markit manufacturing PMI and new home sales Wednesday and third-quarter GDP Friday. 

Market Moves 

Asian stock futures are mixed heading into the trading week after U.S. equities edged lower Friday. The start of the week will test China’s rally Friday after officials waded in to assure investors. The S&P 500 ended the week virtually unchanged after days of wild trading, while tech shares remained under pressure. Bonds sold off, with 10-year Treasury yields hovering near 3.20 percent. The dollar lost ground against most of its Group of 10 peers, but the yen fell. Oil rose, while gold was flat.

Currency Test

Mnuchin is open to changing how the U.S. determines which nations are gaming their currencies, a move that could give Trump the chance to officially brand China a foreign exchange-rate manipulator as he seeks leverage to redefine trade terms between the world’s largest economies. One method Mnuchin would consider is using a 1988 trade act with a broad definition of currency manipulation to designate a country a manipulator, even if the label isn’t warranted by specific tests under a 2015 law, he said. The other would be to change the criteria that help establish whether a country is engaging in competitive devaluation of its currency. Treasury applies three tests to measure whether a country should be labeled a currency manipulator. While the U.S. refrained from labeling China a currency manipulator in a semi-annual report released last week, it was critical of China, highlighting U.S. concerns about the country’s bilateral trade surplus. 

What we've been reading

This is what's caught our eye over the last 24 hours.

  • Lack of investments for China’s $195 billion debt splurge.
  • The big secret of Japan’s credit market. 
  • The world's fastest growing economy has the world's most toxic air.
  • Poll backlash for Australia’s government. 
  • Hong Kong property billionaire Walter Kwok dies
  • Goldman makes changes to Asia investment bank leadership.
  • The company that pays employees to get a full night’s sleep. 

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