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Good morning. Trade concerns are increasing, tensions around Iran are bubbling, Theresa May is staying and Uber is pricing. Here’s what’s moving markets.
Chinese officials will meet with their U.S. counterparts to get the trade talks back under way once more. The atmosphere could hardly be more tense. China said it would retaliate to the U.S. raising tariffs on Friday. President Donald Trump said China “ broke the deal,” rhetoric that sent U.S. stock futures tumbling, has Europe pointing to a lower open and put pressure on oil prices. Companies across industries will be hoping an accord can be reached. Emerging markets too are being shaken by memories of the 2018 battering they received, though looser Federal Reserve policy may limit the trade war impact this time.
As if geopolitical relationships around the world were not already strained, Iran has come hurtling back to the front of minds. Tehran set a 60-day deadline for Europe to throw it an economic lifeline amid U.S. sanctions, otherwise it will abandon limits on uranium enrichment. The U.S. has already banned trade in Iranian metals and the move could have implications for U.S.-Europe relations, dependent on what action Europe takes next, not to mention the ramifications for oil markets. The U.S. secretary of state made his country's view clear, telling the U.K. not to go “wobbly” on issues like Iran.
Theresa May is still in a job for now. The prime minister won a reprieve from her Conservative Party, which kept the rules on challenging for the leadership unchanged and reiterated she’ll remain in place until Brexit is delivered, whenever that may be. May will now continue going after a compromise with the opposition Labour Party after an unsuccessful set of talks. Optimism about the parties cooperating had buoyed the pound but as the uncertainty shows few signs of ending any time soon, the currency has lost its luster again.
The year’s biggest and most anticipated initial public offering is expected to price after trading closes in the U.S. today. Ride-sharing giant Uber Technologies Inc. would likely have wanted prevailing market conditions to be a little better for its long-awaited listing and few other IPOs will be accompanied by global protests by drivers. Now the question is where the issue will price. The company is said to be considering pricing at the middle of the range, despite reportedly having demand at the top end. With a blessing of unicorns so far and with more to come, all eyes will be on Uber on Thursday evening and most of Friday.
In addition to the weakness in U.S. and European stock futures provoked by the tariff talk, China’s yuan dropped to the weakest against the dollar since January and stocks across Asia slid. Note too that Walt Disney Co. earnings topped estimates after the close on Wednesday. Still to come on the earnings calendar, U.K. telecoms firm BT Group Plc and grocer Wm Morrison Supermarkets Plc. After the European close, luxury firm Moncler SpA and French lender Natixis SA will both report.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- The wealthiest investors have a third of their money in cash.
- Chinese robocars are being lapped by their competitors.
- The race to be the next Austin, Texas.
- Who gets to define fake news?
- Australia, where coal remains king.
- Facebook’s quietly building its blockchain unit.
- Weed legalization looks likely. What about psychedelic mushrooms?
©2019 Bloomberg L.P.