Five Things You Need to Know to Start Your Day
Huawei charges escalate tensions ahead of trade talks, another day of key Brexit votes and PG&E files for bankruptcy. Here are some of the things people in markets are talking about today.
U.S. prosecutors allege Huawei Technologies Co. stole trade secrets from an American rival and committed bank fraud by violating sanctions against doing business with Iran in charges filed in New York and Washington state yesterday. While the company has been in the crosshairs of the U.S. government for some time, these charges coming just days before trade talks with a Chinese delegation in Washington look like an escalation of tensions. President Donald Trump is expected to meet Vice Premier Liu He, China’s top trade negotiator, during the talks scheduled for Wednesday and Thursday.
(Another) key vote
What Brexit has lacked in progress over the past few years, it certainly has made up for in drama, and there is more of that scheduled for later today. British Prime Minister Theresa May faces votes in Parliament, with one of those attempting to put Brexit on hold, while another would send her back to Brussels to renegotiate the withdrawal agreement. While traders would prefer the delay of Brexit in the short term, even that would not be enough to see a meaningful change of sentiment towards U.K. equities.
PG&E Corp. and its Pacific Gas & Electric Co. utility filed for Chapter 11 in San Francisco in one of the largest utility bankruptcies all time. The move follows two years of wildfires that killed more than 100 people and resulted in estimated liabilities of more than $30 billion. The knock-on effects of such a large bankruptcy will be felt across the U.S. as suppliers to the company are downgraded, while California’s fight against climate change will also be hampered.
Overnight, the MSCI Asia Pacific Index slipped 0.2 percent while Japan’s Topix index closed 0.1 percent higher, recovering from early-session losses. In Europe, the Stoxx 600 Index was 0.8 percent higher by 5:50 a.m. Eastern Time with all sectors except tech stocks making gains for the session. S&P 500 futures were flat, the 10-year Treasury yield was at 2.740 percent and gold was higher.
Following yesterday’s disappointing outlook from Caterpillar Inc. and Nvidia Corp., today sees the turn of another global economy bellwether to report. Apple Inc. earnings are due after the bell, and will be very closely watched for further signs of a slowdown following Chief Executive Officer Tim Cook’s warning in early January about slower revenue from the holiday quarter. iPhone sales will, as usual, be the key metric for investors to watch as worries about falling demand in China remain high.
What we've been reading
This is what's caught our eye over the last 24 hours.
- U.S. government seen as most corrupt in seven years.
- The cost of dirty money.
- Shutdown talks team stacked with deal makers, not bomb throwers.
- The dark case for both QE and QT being bad. And Treasuries as a haven.
- Bitcoin’s not a great hedge against U.S. stock losses either.
- China's equity market is already testing new chief regulator.
- The art of decision making.
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