Five Things You Need to Know to Start Your Day
Tech shares tumble and emerging-market equities continue their slide as U.S-China trade tensions are poised to take center stage once again. Here are some of the things people in markets are talking about.
Tech Stocks Stumble
U.S. stocks fell to a two-week low amid renewed selling in technology shares as the Trump administration considered escalating the trade war and concerns mounted over flagging demand for computer chips. The Nasdaq indexes retreated as semiconductor shares paced declines on worries the sector will slow. Selling eased in U.S. afternoon trading, though the S&P 500 still ended lower as mixed economic data ahead of Friday’s jobs report added to investor discomfort. Emerging-market stocks retreated for a seventh day, bringing losses from a recent high to almost 20 percent. The public-comment period for proposed U.S. duties on an additional $200 billion of Chinese imports came to a close. Investors on Friday will be on the lookout for developments on their imposition and timing, as well as reaction from Beijing.
Can China Contain EM Contagion?
China’s growing share of the global economy means its familiar role as the bulwark between emerging market pain and developed economies has never been more crucial. This year’s market turmoil in Argentina, Turkey and South Africa, now spreading to Asia, so far has done little damage to the growth outlook for most developed economies. Indeed, U.S. Federal Reserve Chairman Jerome Powell has showed scant inclination to slow the pace of monetary tightening, which is causing so many strains across the developing world. If the slowdown in China’s economy gets much worse, though, it’ll be a different story. China makes up about 15 percent of the global economy, compared with just 3 percent during the Asian crisis two decades ago, and contributes more than 30 percent of global growth. It’s the biggest trading partner for many emerging markets.
Look Out, Japan
U.S. President Donald Trump described his good relations with Japanese leadership in a phone call Thursday but added that “of course that will end as soon as I tell them how much they have to pay,” according to an opinion piece by the Wall Street Journal’s James Freeman. Freeman said Trump still seems troubled by the terms of U.S. trade with Japan. The call came from Trump after Freeman gave the president credit for the economic results of tax and regulatory reform. Freeman said Trump sounded “very stable” and—still very focused on eliminating deficits with America’s trading partners.
SoftBank Lures Lenders
Masayoshi Son is asking Wall Street banks to open their pocketbooks if they want in on what could be the biggest initial public offering ever, according to people familiar with the matter. SoftBank Group Corp. has told potential underwriters seeking a large role in the blockbuster IPO of its Japanese wireless unit that they should offer to lend to other parts of the parent company’s empire, said the people, adding that SoftBank has discussed options including using stakes in its companies as collateral. Firms offering financing are seen as much likelier to get a spot in the IPO of SoftBank Mobile, they said. “There is no truth to this,” SoftBank spokesman Takeaki Nukii said by phone, declining to comment further.
Hedge Fund Takes Aim at Hyundai Motor, Again
Elliott Management Corp., the activist fund that forced Hyundai Motor Group to scrap an $8.4 billion deal this year, is resuming its push for changes at the South Korean automotive giant. In a letter to Hyundai, billionaire Paul Singer’s fund called for the merger of some key units to bolster shareholder value. One option would be for car-parts maker Hyundai Mobis Co. to sell its after-sale service business to affiliate Hyundai Motor Co. and then merge what’s left of Mobis with logistics affiliate Hyundai Glovis Co., according to the Aug. 14 letter, seen by Bloomberg News. In the letter, Elliott invited Hyundai to discuss the proposals. The Korean company subsequently declined, citing possible breaches of local rules, people familiar with the matter said, asking not be identified.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- Flipping office floors is booming business for Hong Kong tycoons.
- Bitcoin is falling off a cliff, and things are likely to get worse before they get better.
- The Australian dollar is acting like an emerging-market currency.
- Gay sex is now legal in India.
- Brazil’s presidential front-runner was stabbed at a rally.
- The Great Barrier Reef is showing "signs of recovery."
- These are the cities with the most ultra-rich people.
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