Five Things You Need to Know to Start Your Day
Shutdown fears loom, bad news for Theresa May, and oil hits the highest since November. Here are some of the things people in markets are talking about today.
The thing about the deal brokered to end the longest shutdown in U.S. history is that it was only a short-term funding extension – and the time that bought is rapidly running out. While the federal government has the money to keep operating until Feb. 15, House Speaker Nancy Pelosi said the committee working to resolve the stalemate needs to finalize the plan by this Friday to allow time for votes in Congress. That process risks being upended by President Donald Trump’s State of the Union address tomorrow which may include an emergency declaration to start building a border wall.
Bad news on Brexit
There were more signs of the pressure the uncertainty over Brexit is putting on businesses in the U.K. over the weekend when carmaker Nissan said it would no longer make its upcoming X-Trail model at its British plant, as had been previously announced. Construction industry data showed that the sector barely grew in January, with respondents to IHS Markit’s survey saying that clients were taking a “wait-and-see approach” before committing to new investments. Prime Minister Theresa May, meanwhile, has set up a working group to find a solution to the stand off over the withdrawal agreement that could prevent a hard exit on March 29.
West Texas Intermediate futures hit the highest level since November this morning, with a barrel for March delivery rising as high as $55.75. The rally, driven by political uncertainty, OPEC cuts and worries about a slowdown in shale production, is seeing a rush out of short positions on the commodity. Hedge funds have abandoned more than half their short-selling bets in the last four weeks after oil had its best month in almost three years in January.
Overnight, the MSCI Asia Pacific Index climbed less that 0.1 percent as trading in the region slows down for the Lunar New Year. Japan’s Topix index closed 1.1 percent higher as the yen extended losses against the dollar. In Europe, the Stoxx 600 index was flat at 5:50 a.m. Eastern Time with no major news to drive equities on what is a quiet start to the week. S&P 500 futures pointed to a small gain at the open, the 10-year Treasury yield was at 2.698 percent and gold was lower.
Federal Reserve Bank of Minneapolis President Neel Kashkari said Fed Chair Jerome Powell is “coming around” to a wait-and-see view on the economy. Kashkari, who is not a voter this year on the FOMC, said that he still thinks the U.S. economy has room to run, while warning against tapping the brakes too early. At 7:30 p.m., Cleveland Fed President Loretta Mester is due to discuss the economic outlook, which may give investors a better idea of who else at the Fed is flashing dovish signals. Also today, Google parent Alphabet Inc. reports results after the bell.
What we've been reading
This is what's caught our eye over the weekend.
- Odd Lots: What you need to understand about India ahead of the upcoming election.
- JPMorgan says 2020 “might not be a year to think about recession.”
- Want a hot stock tip? Watch Trump’s State of the Union speech.
- Bond markets signal the ECB may have missed its chance to lift rates.
- Why Italy’s debts are Europe’s big problem.
- The curious case of Norway’s 60 million barrels of missing oil.
- The “stuff” of the universe keeps changing.
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