Five Things You Need to Know to Start Your Day
Good morning. Asian equities started the week on a positive note, U.S. President Donald Trump announced some good news on Mexico, Boris Johnson reiterated his tough stance on Brexit, and central banks are flexing their muscles. Here's what's moving markets.
Trump announced that tariffs on Mexican goods would be suspended indefinitely, although the Latin American country appears baffled by his claim that an agreement on agriculture was reached as part of a pact to stem immigration into America. On Trump’s other trade war, the head of the International Monetary Fund, Christine Lagarde, reiterated her call for the U.S. and China to de-escalate the boiling tensions. The U.S. says its had constructive talks with China’s central bank.
They’re the superheroes of the markets, OECD Secretary General Angel Gurria said at the weekend’s G-20 meetings, describing central banks that he says are ready to take action to damp the impact of the tariff war. “The question is: How much armory do they still have, how many bullets, particularly silver bullets?” the philosophical Gurria added. The Bank of Japan and People’s Bank of China have both been talking up their ability to add more stimulus if needed.
The favorite to move into Downing Street, Boris Johnson, pledged a hard line on Brexit at the weekend, including the option of leaving without a deal, while adding he would scrap the Irish border backstop. The pound may slide to a two-year low if a euroskeptic like Johnson takes over as the U.K. prime minister, according to a Bloomberg survey of analysts. A list of candidates to lead the Conservative Party will be finalized today.
Asian stocks rose overnight and the peso surged the most in almost a year as Trump’s agreement with Mexico was digested. The euro pared some of Friday’s gain overnight despite Italy saying it will be able to comply with European fiscal rules, while in South Africa things aren’t looking too rosy for the rand. Oil extended gains above $54 a barrel after after drilling activity data and Saudi Arabia saying it’s sure OPEC+ output curbs will be extended.
FTSE 100 member Ferguson Plc, a bellwether for construction suppliers that target the U.S. market, reports quarterly numbers. Meanwhile, U.K. lawmakers quiz Huawei executives on security as the nation weighs whether to allow the Chinese giant to have a role in next-generation broadband networks. Economic data is limited to industrial production from Italy.
What We’ve Been Reading
This is what’s caught our eye over the weekend:
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