Five Things You Need to Know to Start Your Day
Trade-conflict realities start to hit home across the globe, Pakistan heads to the polls for a critical election, and Fosun is looking at a potential major acquisition. Here are some of the things people in markets are talking about.
Stocks Jump, Bitcoin’s Rally Continues
U.S. equity benchmarks finished the day mostly higher, led by technology and health-care companies, while China’s efforts to support its economy spurred interest in higher-risk assets across Asia. The dollar slipped, sterling climbed after Prime Minister Theresa May took control of Brexit talks, and the lira plunged as Turkey’s central bank unexpectedly held rates steady. Google parent Alphabet Inc. anchored the American stock advance early in the U.S. session after it beat analysts’ estimates. Exxon Mobil and Chevron gained as West Texas crude pushed higher. Indexes retreated from their highs late, however, pulling the Nasdaq back from an intraday record. Bitcoin surged past $8,000, extending its rally since the start of July to about 40 percent, partly on optimism the first cryptocurrency exchange-traded fund could be approved by the U.S. Securities and Exchange Commission within weeks.
Tariffs Start to Hit Home
Protectionism is slowly starting to weigh on the global economy. From demand at factories to company profits and prices consumers are paying, the tit-for-tat trade battle U.S. President Donald Trump started with China and the European Union is showing up in the numbers. And it’s still early days, with Trump saying Tuesday that “tariffs are the greatest.” The latest signs of the fallout came in activity reports from Japan, Europe and the U.S., as well as anxious words from companies facing additional uncertainty and having to decide between taking a hit to their profit margins or jacking up prices. Many manufacturers are facing higher raw-material costs, another squeeze on earnings.
Pakistan Heads to the Polls
Pakistan goes to the polls Wednesday in a closely fought election that will determine the course of the nuclear-armed nation central to U.S. anti-terrorism efforts and China’s global infrastructure ambitions. Surveys show none of the top three parties winning a majority, paving the way for horse-trading to form a government after results come in late in the day. Pakistan’s powerful military has been accused of, and denied, intimidating critics and reporters to elect a pliant government. Imran Khan, the celebrated former cricketer turned anti-corruption crusader, had the momentum heading into the election and is seen as the military’s top choice for prime minister. His main rival is a party helmed by former Prime Minister Nawaz Sharif, who has clashed repeatedly with the military over the years and was jailed this month on corruption charges, which he is appealing.
Fosun Weighs Ageas Takeover
Fosun International Ltd. is considering making an offer for all or parts of Belgian insurer Ageas in what could be the Chinese conglomerate’s boldest move to expand its international footprint, according to people familiar with the matter. Fosun is talking to advisers about alternatives including teaming up with a partner to split the Belgian company or increasing its current stake, the people said, asking not to be named because the deliberations are private. No final decisions have been made and Fosun may decide against pursuing a deal, they said. Brussels-based Ageas has a market value of 8.9 billion euros ($10.4 billion), after shares rose 7.2 percent this year. The deliberations may be yet another sign of China’s renewed appetite for expanding globally after a slowdown last year amid tighter curbs on capital outflows and increased scrutiny of foreign acquisitions.
Coming Up ...
Wednesday brings markets to the cusp of the major economic events for the week — the ECB’s interest rate decision on Thursday and U.S. GDP on Friday — even as equities march more and more to the drumbeat of Chinese policy easing. The Asian economic calendar heats up a touch, with New Zealand trade figures and Australian CPI on tap. Economists are forecasting an acceleration in headline inflation Down Under but expect core inflation measures to remain stuck below the bottom of the RBA's 2 to 3 percent annual target range. Some significant variation from forecasts would be needed to break Australia's 10-year yield out of its current channel at about 20 basis points under Treasuries.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- Short the Australian dollar, the currency's top forecaster says.
- Malaysia is pushing back against China's dominance in the economy.
- Two leading U.S. senators plan to introduce a bill boosting Russian sanctions.
- Train robbers are on a rampage in Mexico.
- Hundreds are missing after a hydroelectric dam collapsed in Laos.
- Deutsche Bank is hiring more recent university graduates as it looks to cut costs.
- Tesla has a problem fixing cars.
©2018 Bloomberg L.P.