Five Things You Need to Know to Start Your Day
Five Things You Need to Know to Start Your Day
(Bloomberg) --
Good morning. Potential tariffs on Mexico take center stage, investors are digesting the European Central Bank meeting and we check in on emerging markets. Here’s what’s moving markets.
Mexican Standoff
Tensions with China remain the central focus of trade war angst but Friday and the weekend seems likely to be dominated by how talks between the U.S. and Mexico are going. The U.S. is considering delaying the imposition of tariffs which had been planned for Monday and Mexico says some progress is being made towards a detente. But U.S. Vice-President Mike Pence says the plan remains to put the tariffs in place. A delay would be at least a temporary relief for the auto industry, which is very concerned about the impact the Mexico levies could have. Don’t forget China though. Its central bank chief says the country has plenty of room to change policy to offset any trade war-related woes.
Draghi's Doves
Investors will continue to digest yesterday’s unexpectedly eventful European Central Bank decision day, including the revelation that policymakers have been discussing potential rate cuts and an extra bout of quantitative easing. The reaction indicates investors aren’t convinced Mario Draghi and his colleagues have the ammunition and the tools to get inflation to their target, traders have trimmed rate-cut expectations and the new long-term loan program seems to be something of a compromise. Ultimately, with Draghi’s time at the helm moving towards its end, the task of protecting the euro zone will fall to his predecessor.
Oil’s Future
Oil prices have had quite a week. The market has been choppy amid trade war concerns and worries about a supply glut, but crude is a little higher this morning. On the supply side, attention may turn to potential tensions between OPEC and Russia after Russian President Vladimir Putin emphasized the differences between the two sides, reiterating the desire from the pair to cooperate but saying that Russia is happier with lower oil prices than Saudi Arabia is. The other major jitter is around U.S. supplies, though now a question is being asked about where all the missing barrels of American oil have gone.
EM Check
A little health check on emerging markets is in order. Take South Africa, where the rand weakened to the lowest level against the dollar since October as the economy contracted and the ruling party debated the mandate of its central bank. Russia's next central bank meeting may be a live one too after its governor said an interest rate cut is a possibility. India, meanwhile, already cut rates and more such moves could be on the way as a slowdown in growth moves to the center of policymakers’ concerns. And never take your eyes off the Turkish lira, where a recent rally is sputtering.
Coming Up...
U.S. payrolls will be the center of attention in the European afternoon, with consensus expecting 175,000 job additions for May. It comes in the wake of some pretty soft numbers from the ADP report. Asian stocks edged higher ahead of those numbers, while the Chinese yuan dipped a little after the comments from its central bank. We’ll also get industrial production numbers from Germany and France.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- China’s first bull market only lasted 69 days.
- 4 in 10 Americans don't think they’ll ever retire.
- Uber will offer helicopter rides in New York in July.
- One man’s plan to tow an iceberg.
- Basketball players can’t lie about their height any more.
- Meatless burgers are doing even better than expected.
- Why is fashion still obsessed with the 90s?
To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net
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