Five Things You Need to Know to Start Your Day
U.S. stocks briefly gained on optimism President Donald Trump was retreating from a hard-line approach to Chinese investment, but the rally was cut short after comments from a senior White House advisor. Here are some of the things people in markets are talking about.
Kudlow Spooks Stocks
An early bump in U.S. equities proved fleeting after Trump’s top economic adviser Larry Kudlow said the president isn’t retreating on China, even after the White House chose a less confrontational approach on Chinese investments. Technology shares led the declines amid concerns the administration will crack down on Chinese investment in the sector. Energy producers jumped as oil briefly topped $73 a barrel. The dollar advanced against all G-10 peers. Treasuries rallied on the trade angst, boosted by a solid five-year auction.
Emerging-Market Rout Gains Steam
The rout in emerging markets deepened as investors sifted through the latest remarks from the Trump administration on protectionist measures, with currencies slumping and stocks on pace for their worst quarter since September 2015. The MSCI emerging markets equity gauge tumbled 1.5% Wednesday, while its currency counterpart slid 0.5% as the rand and real plunged. The offshore Chinese yuan slid for a 10th-straight day in the longest losing streak since March 2014, and the Hungarian forint sank to a record low as the nation’s central bank maintained its dovish monetary policy.
China Think Tank Warns of ‘Financial Panic’
A leaked report from a Chinese government-backed think tank has warned of a potential “financial panic” in the world’s second-largest economy, a sign that some members of the nation’s policy elite are growing concerned as market turbulence and trade tensions increase. Bond defaults, liquidity shortages and the recent plunge in financial markets pose particular dangers at a time of rising U.S. interest rates and a trade spat with Washington, according to a study by the National Institution for Finance & Development that was seen by Bloomberg News and confirmed by an NIFD official. The think tank warned that leveraged purchases of shares have reached levels last seen in 2015 -- when a market crash erased $5 trillion of value. “We think China is currently very likely to see a financial panic,” NIFD said in the study, which appeared briefly on the Internet on Monday, before being removed. “Preventing its occurrence and spread should be the top priority for our financial and macroeconomic regulators over the next few years.”
Apple, Samsung End Patent War
Apple Inc. and Samsung Electronics Co. reached a settlement in their U.S. patent battle, ending a seven-year fight over smartphone designs that spanned the globe. The string of lawsuits started in 2011 after Steve Jobs, Apple’s co-founder who died that year, threatened to go “thermonuclear" on rivals that used the Android operating system and accused Samsung of “slavishly” copying the iPhone design. The companies didn’t disclose the terms of the accord and didn’t immediately respond to requests for comment. The ensuing litigation cost each company hundreds of millions of dollars in legal fees and tested their reputations as innovators. Wednesday’s settlement resolved the last outstanding dispute.
Trump-Putin Summit Set
Trump and Vladimir Putin will hold their first bilateral summit as the leaders seek to reverse a downward spiral in relations that has been exacerbated by findings that Russia meddled in U.S. elections. Russia announced the deal after Putin hosted U.S. National Security Adviser John Bolton for talks in Moscow on Wednesday. Bolton, speaking at a news conference after the meeting, said the time and place of the summit will be released simultaneously by U.S. and Russian officials on Thursday.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- Germany was eliminated from the World Cup after a 2-0 loss to South Korea.
- Signs of higher U.S. inflation are creeping into regional Fed surveys.
- These are the world’s biggest family fortunes.
- Elon Musk told Tesla employees that a bearish Goldman Sachs analyst was in for “ a rude awakening.”
- Toyota’s Camry faces an $1,800 cost increase on Trump’s import tariffs.
- Facebook emerged as a contender to broadcast the English Premier League in some Asian nations.
- Larry Summers says too-tight Fed policy is a greater risk than inflation.
©2018 Bloomberg L.P.