Five Things You Need to Know to Start Your Day
Trade tensions ease after Trump-Juncker meeting, Facebook plunges, and it’s ECB day. Here are some of the things people in markets are talking about today.
President Donald Trump backed off on threats to impose tariffs on cars imported to the U.S. while European Commission President Jean-Claude Juncker said the European Union would import more U.S. soybeans, after trade talks in Washington yesterday. Carmakers in Europe are surging this morning, with Germany’s auto-industry association calling the meeting a “big step forward.” While the easing of trade tensions -- including an EU commitment to expand LNG imports from the U.S. -- is being hailed by markets, there is a lot of negotiating to do before steel and aluminum tariffs are dropped.
Facebook post earnings
Shares in Facebook Inc. plunged as much as 24 percent in after-hours trading following results that disappointed investors, with Chief Financial Officer David Wehner warning sales growth will continue to slow through the rest of the year. The controversies that have hit the company are proving a drag on user growth, flatlining in its biggest markets. Should the selloff be replicated when the regular U.S. session opens this morning, it will be the biggest stock wipeout in American history.
Summer at the ECB
At 7:45 a.m. Eastern Time, the European Central Bank will announce its latest monetary-policy decision, followed by a press conference with President Mario Draghi at 8:30 a.m. While the meeting is taking place on the sixth anniversary of Draghi’s “whatever it takes” promise that signalled the beginning of the end of the euro crisis, investors are expecting very few fireworks today. With no projected changes to policy instruments, traders will look for hints as to whether the bank intends to modify the reinvestment rules of its asset-purchase program, while looking for clarity on when the ECB will finally start raising rates.
Overnight, the MSCI Asia Pacific Index rose 0.3 percent while Japan’s Topix index closed 0.7 percent higher as investors welcomed the cooling of the trade standoff between the EU and the U.S. In Europe, the Stoxx 600 Index was 0.6 percent higher at 5:45 a.m. in a broad-based recovery led by the the region’s carmakers. S&P 500 futures pointed to a drop at the open, with the index dragged lower by Facebook, the 10-year Treasury yield was at 2.967 percent and gold slipped.
Initial jobless claims numbers are expected to climb to 215,000 this morning from last week’s almost 50-year low of 207,000 when the data are released at 8:30 a.m. It’s another bumper day for earnings with Amazon.com Inc., Intel Corp., McDonald’s Corp. and Starbucks Corp. among the many companies reporting.
What we've been reading
This is what's caught our eye over the last 24 hours.
- How traders have changed since the massive selloff earlier this year.
- Emerging markets may have bottomed, Goldman says.
- Scared of banks before the ECB? Here’s a stock-picker’s alternative.
- The Bank of England is war-gaming Brexit day with lenders.
- Holding cash in preparation for a Fed hawkish surprise.
- BNP Paribas revives “short of a lifetime” trade idea.
- Water on Mars.
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