Five Things You Need to Know to Start Your Day
U.S. stocks maintain their record run, while foreigners flee Japanese shares. Here are some of the things people in markets are talking about.
Another Day, Another Record
U.S. stocks eked out a gain to claim a fresh closing record Tuesday, while Treasury yields climbed as investors assessed the latest developments from the Trump administration’s trade policies. The S&P 500 fluctuated throughout the day, rising past 2,900 for the first time before slipping back below that level. Real estate and technology stocks paced the advance, while rate-sensitive shares retreated as the 10-year Treasury yield moved toward 2.90 percent. Bitcoin climbed for the fourth-successive weekday, breaking above both $7,000 and its 50-day moving average. The rally in emerging markets lost momentum, with the lira tumbling after Moody’s downgraded several Turkish banks.
It’s shaping up to be the biggest exodus in more than three decades. Foreigners have dumped a net 3.9 trillion yen ($34.7 billion) in Japanese equities so far this year, according to data from Japan Exchange Group Inc. that runs through Aug. 17. That’s on course to be the largest annual selloff since 1987, the year of Wall Street’s famous Black Monday market crash. Overseas investors are fleeing as the world’s second-largest stock market limps through 2018, buffeted by everything from concerns about trade wars to the impact of next year’s sales-tax increase. The benchmark Topix index has lost almost 5 percent this year for one of the worst performances among developed markets tracked by Bloomberg.
U.S. Won’t Suspend More Korea Military Drills
The U.S. doesn’t plan to suspend more joint military drills with South Korean forces, Defense Secretary Jim Mattis said, as diplomatic progress on North Korea’s denuclearization appears to have stalled. “We have no plans at this time to suspend any more exercises,” Mattis told reporters at the Pentagon on Tuesday, adding that the Defense Department hasn’t made decisions about major annual drills expected next year. Separately, a rift is emerging between South Korea and Japan in their response to North Korea and whether it poses an urgent nuclear threat. In Tokyo, Prime Minister Shinzo Abe’s government reaffirmed Tuesday that the regime constituted a “grave and imminent” danger to Japan. Meanwhile, South Korean President Moon Jae-in is taking steps to upgrade ties with Kim Jong Un, establishing a liaison office over the border and making plans to visit Pyongyang next month.
Better Margins Boost China’s Biggest Banks
China’s biggest banks posted stable earnings growth in the second quarter, as tighter liquidity improved their lending margins. Profits at four of the five largest lenders rose at least 5 percent in the three months through June, as President Xi Jinping’s crackdown on riskier financiers pushed business to large state-connected banks. The results were broadly in line with expectations, even as a record surge in bad debt, prompted by the deleveraging effort, swamped smaller lenders. While Chinese policy makers are focusing on cutting risky debt, they are also seeking to protect economic growth as the trade war with the U.S. intensifies. Authorities have taken several steps to free up credit in the past month, including ordering the nation’s lenders to boost support for infrastructure projects, small businesses, agriculture and exporters.
Trump Takes Aim at Tech
President Donald Trump, adding his voice to a growing chorus of U.S. conservatives who claim social media companies favor liberal viewpoints, accused Alphabet Inc.’s Google of rigging its search results to give preference to negative stories about him. “This is a very serious situation-will be addressed!” Trump said in a tweet early Tuesday, in his latest claim of bias on the part of a news or social media company. He accused the search engine of “RIGGED” search results that highlight bad news, adding “Republican/Conservative & Fair Media is shut out. Illegal." Google issued a statement saying its searches are designed to give users relevant answers.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- China's Silicon Valley threatens toswallow up Hong Kong.
- New Australian leader Scott Morrison faces four key challenges before the next election.
- The RBI left the rupee out to dry.
- A 1MDB-linked banker quietly vanishes from the website of his last known employer.
- Russia is staging its biggest military maneuvers since the Cold War.
- What does a China superpower look like? Nothing like the U.S.
- These are the 12 best T-shirts, according to menswear experts.
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