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The E.U. and U.K. agree divorce terms, markets in for another rocky week as concerns about an economic slowdown mount and the highly-anticipated Trump-Xi meeting at G-20 looms large. Here are some of the things people in markets are talking about.
Brexit Divorce Terms
The U.K. agreed to divorce terms at a special summit in Brussels, with European leaders warning British politicians they will not get a better deal if they reject the offer on the table because there is no “plan B.” Theresa May backed that view as she staked her authority on a campaign to persuade Parliament against the odds to endorse her Brexit deal. She refused to rule out quitting as U.K. prime minister if she fails. She said she will personally lead a “campaign” lasting “a few weeks” to win support for her agreement among politicians and voters. Then, Parliament will hold a decisive vote on whether to accept or reject the accord before Christmas.
Renault-Nissan Accord Backed
The governance and shareholding structure of the Nissan-Renault alliance shouldn’t be changed following the removal of Nissan Chairman Carlos Ghosn, French Finance Minister Bruno Le Maire said. Le Maire called the alliance “indispensable.” Meanwhile, Japan’s national broadcaster NHK reported that Ghosn has denied any wrongdoing after being arrested for alleged financial misconduct. The broadcaster cited people familiar with the matter. And here is what to watch in the unfolding crisis this week.
Asian equity futures are pointing lower after U.S. shares fell again Friday, with the S&P 500 Index tumbling into a correction in holiday-shortened trading. Investors seem torn between viewing the sell-off as healthy given a decade of gains and auguring an economic downturn. Treasuries rose, with 10-year yields dropping to the lowest since September, while the dollar rose against every G-10 peer. The pound rose after the EU’s endorsement of the U.K. Brexit deal. Oil prices cratered Friday, with West Texas Intermediate crude falling toward $50 a barrel amid record Saudi output and the global stock sell-off.
All eyes this week will be on U.S. President Donald Trump and his Chinese counterpart Xi Jinping planned meeting at the Group of 20 leaders’ meeting in Argentina that kicks off on Friday. Market participants will study meeting minutes from the Federal Reserve to gauge its eagerness to boost interest rates in December. Fed Chairman Jerome Powell addresses the New York Economic Club on Wednesday, while Fed Vice Chairman Richard Clarida is the keynote speaker at the Clearing House conference in New York where various Fed policy makers also talk. European Central Bank President Mario Draghi addresses the European Parliament’s committee for economic and monetary affairs. More notable on the data docket: Hong Kong trade is due Monday, China industrial profits Tuesday, U.S. new home sales and international trade are out Wednesday, while jobless claims are released Thursday. China manufacturing and non-manufacturing PMIs are due Friday.
Hot to Not
Hong Kong’s hottest initial public offerings have produced the worst returns for investors this year, while the least popular deals have fared far better. Ping An Healthcare and Technology Co., in which retail investors placed orders for 654 times the shares initially available, has tumbled 35 percent since it started trading in May. Biotechnology firm Ascletis Pharma Inc., whose retail book was covered 10 times, is down 44 percent from its IPO price, and Meituan Dianping, a food-delivery giant that attracted billionaire investors including Hong Kong’s richest man Li Ka-shing, has dropped 22 percent. Redsun Properties Group Ltd., Zhenro Properties Group Ltd. and DaFa Properties Group Ltd. received individual orders filling just 0.8 times their retail books, on average. Yet they’ve climbed an average 18 percent from their IPO prices, putting them among the top five performers from deals above $100 million.
What we've been reading
This is what's caught our eye over the last 24 hours.
- Noble Group extends restructuring deadline.
- Pro-China’s party big win in Taiwan.
- Bond market dials back expectations for U.S. rate hikes.
- The chipmaker caught in U.S. assault on China’s tech ambitions.
- Bond gurus on the market sell-off.
- Japanese investors fleeing Aussie bonds.
- Chinese scroll expected to deliver Asian art record.
©2018 Bloomberg L.P.