The euro sign sculpture is reflected in office windows as it stands outside the former European Central Bank (ECB) headquarters in Frankfurt, Germany (Photographer: Krisztian Bocsi/Bloomberg)

Five Things You Need to Know to Start Your Day

(Bloomberg) --

China and the U.S. clash at the WTO, the ECB stays the course, and Amazon helps investors forget about Facebook, a little. Here are some of the things people in markets are talking about.

Tempers Flare at WTO

The U.S. and China clashed at a World Trade Organization meeting, with Washington demanding reforms to make the Chinese economy more responsive to market forces. Chinese Ambassador Zhang Xiangchen said Beijing wouldn’t respond to heavy-handed tactics. “Extortion, distortion or demonization does no good to resolve the issues,” Zhang said Thursday in Geneva. “Holding our feet to the fire has never worked.” The Chinese government has drawn up plans to retaliate against any additional U.S. tariffs, regardless of the volume of goods targeted, another Chinese official said at an event in Beijing. “We clearly have a chronic problem with China,” U.S. Trade Representative Robert Lighthizer said in Senate testimony, estimating that trade issues with Beijing will take years to resolve.

ECB Sticks to Policy Path

The European Central Bank stuck to its plan to end bond purchases as the European Union and U.S. stepped back from a trade war and the currency bloc’s economic expansion remained solid. The Frankfurt-based institution reiterated it will continue buying 30 billion euros ($35 billion) of assets a month until the end of September, reduce the pace to 15 billion euros from October, and stop additional purchases at the end of the year. It also pledged to keep interest rates unchanged “at least through the summer of 2019” and repeated that additional support will come from its policy of reinvesting maturing debt. ECB President Mario Draghi didn’t reveal much else at his post-meeting press conference, which lasted an unusually short 40 minutes.

Amazon Avoids Facebook Letdown reported better-than-expected earnings in the second quarter and forecast more of the same in the current period, igniting investor optimism about cloud computing and advertising growth that’s more profitable than its main business of selling products over the internet. The world’s largest online retailer forecast operating income in the current quarter of $1.4 billion to $2.4 billion on revenue of $54 billion to $57.5 billion. Analysts were looking for operating income of $1.28 billion on sales of $58 billion. Shares rose in extended trading. The results and outlook show Amazon is managing to keep a lid on expenses while investing heavily in new devices and businesses like selling groceries and prescription drugs. The numbers also calmed Wall Street concerns after Facebook Inc.’s disappointing second-quarter report hammered its stock price.

Indonesia Looks to Tourists as Investors Exit 

As foreign funds continue to dump Indonesian stocks and bonds, President Joko Widodo is chasing dollars from tourism and exports to help contain a widening current-account deficit. Widodo, known as Jokowi, ordered ministers, officials, and central bankers on Thursday to step up efforts to lure more foreign visitors to the pristine beaches dotting hundreds of islands across the archipelago. He also asked provincial chiefs to expedite tourism and exports-related investments to address the twin deficits of current account and trade. The current-account shortfall is set to swell to the highest in four years as foreign investors turn net sellers of Indonesian bonds and stocks, amid a selloff in emerging markets triggered by rising U.S. interest rates and a stronger dollar.

Coming Up ...

China's report on June industrial profits will be the data highlight Friday, after earnings growth came roaring back in April and May. The BOJ is set to carry out regular bond buying after the 10-year yield rose to a year-high of 0.1 percent just three days after the central bank held a fixed-rate operation to cap yields. After the Asia close, attention will turn to Washington, where the Commerce Department is expected to report sizzling second-quarter growth when it releases GDP data during the American session.

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