Police officers stand guard outside the OPEC Secretariat ahead of the the 174th Organization Of Petroleum Exporting Countries (OPEC) meeting in Vienna, Austria.(Photographer: Stefan Wermuth/Bloomberg)

Five Things You Need to Know to Start Your Day

(Bloomberg) --

Asia stocks set to fall with major markets out for holidays, OPEC shrugs calls from Donald Trump to lower oil prices and the Federal Reserve very likely to lift interest rates this week. Here are some of the things people in markets are talking about today.

Not Talking

The U.S. and China are hours away from a new round of tariffs on each other’s goods, with no improvement in relations between the two rivals in sight. The trade battle between the world’s two biggest economies took another turn for the worse when China on Saturday called off talks with U.S. officials that had been planned for this week. From 12:00 a.m. Washington time on Monday, $200 billion of Chinese products will be subject to tariffs on top of the $50 billion in goods already slapped with tariffs actions in the year. Meanwhile, $110 billion of goods from the U.S. will become subject to Chinese tariffs around the same time, or about 70 percent of the value of goods it bought from America in 2017. There’s a growing consensus in Beijing that substantive talks will only be possible with the Trump administration after U.S. mid-term elections in November, people familiar said.

OPEC+ Rebuffs Trump

U.S. President Donald Trump’s demand that OPEC take rapid action to reduce oil prices got a tepid response, with the group saying it would boost output only if customers requested it. In contrast to the dramatic policy U-turn that Trump’s tweets provoked earlier this year, Saudi Arabia, Russia and their allies signaled less urgency and stopped short of promising specific extra volumes of crude. The Organization of Petroleum Exporting Countries and its allies are just halfway toward their June pledge to pump an extra 1 million barrels a day of crude to fill the gap created by an economic collapse in Venezuela and renewed U.S. sanctions on Iran. 

Markets Open 

There may limited reaction to the latest trade developments with markets closed in Japan, China, South Korea and Taiwan. Futures in Australia and Hong Kong pointed to weaker opens. The yen ticked higher and the Australian dollar declined. The S&P 500 Index pared gains Friday to end flat. The pound will be closely watched after slumping the most in 10 months after Theresa May said Brexit talks were at an impasse as the EU rebuffed her proposal. Treasury yields held above 3%, the dollar gained and oil hovered around $71. 

Coming Up...

The Fed’s anticipated interest-rate increase on Wednesday may be overshadowed by the 2019 dot plot or any changes to its Aug. 1 statement. Investors will be looking out for whether the Fed delivers a hawkish or dovish statement. Chairman Jerome Powell's press conference will be key to understanding how the FOMC views the tariff war and twin U.S. deficits.
Key U.S. data will be Friday's personal income and spending report that contains two important inflation gauges. Investors will get their first look at China's September economic performance on Friday, with Caixin manufacturing PMI. August factory, jobs and retail sales data are due from Japan the same day, with improvements expected across the board. Bank of Japan Governor Kuroda holds a press conference on Tuesday with the release of July minutes. Asian central banks meet Thursday with Indonesia and the Philippines possibly raising rates, while the Reserve Bank of New Zealand is expected to hold. World leaders gather at the UN general assembly in New York. Italy’s budget dominates Europe’s economic calendar. 

Comcast’s Sky Bid 

Comcast Corp. has offered about $40 billion for Sky in a knockout bid, topping rival suitor 21st Century Fox Inc. in an auction for the European TV giant, as media companies grapple with how to respond to the meteoric rise of Netflix Inc. Comcast is poised to almost double its customers. The acquisition would also help Comcast further hedge its bets in a fast-changing business, believing the key to competing with Netflix is to straddle both sides of the business and the Atlantic Ocean.

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