Five Things You Need to Know to Start Your Day
U.S. and China close to clinching a trade deal, Trump talks down the dollar, and policy makers gather in Beijing. Here are some of the things people in markets are talking about today.
Both China and the U.S. are talking up the chances of a brewing trade deal. The Wall Street Journal is reporting that an accord could see the lifting of current tariffs on China, with authorities in Beijing likely to cut import duties on U.S. goods. Monitoring the implementation of an agreement remains a sticking point, with Washington seeking compliance before tariffs are fully reversed. Stocks are already rising on the increasing chances of peace breaking out, with analysts suggesting that an end to the stand-off could add 10 percent to global equities.
President Donald Trump renewed his attacks on Federal Reserve Chair Jerome Powell at a speech to his base over the weekend, in which he accused Powell of being someone who liked raising rates. Market expectations are for no more Fed hikes this year. While currency traders seem to have dismissed the comments as nothing more than the president in campaign mode, there is a risk that other world leaders could see them as an act of bad faith as the U.S. attempts to negotiate currency provisions into trade deals.
The National People’s Congress in Beijing, which kicks off tomorrow, will give policy makers a chance to outline how they intend to respond to the slowing economy. There is a plan to cut the value-added-tax rate covering manufacturers by 3 percentage points, according to a person familiar with the matter, a potential 0.6 percent boost to GDP. Some analysts also see more monetary easing -- a risk to the recent yuan rally.
Overnight, the MSCI Asia Pacific Index climbed 0.4 percent while Japan’s Topix index closed 0.7 percent higher as trade-deal optimism led to broad gains. In Europe, the Stoxx 600 Index had gained 0.3 percent by 5:50 a.m. Eastern Time with oil and mining companies among the biggest gainers as investors moved away from defensive stocks. S&P 500 futures, though well off their overnight highs, still pointed to green at the open. The 10-year Treasury yield was at 2.748 percent and gold was lower.
Crude is recovering some of Friday’s losses in trading this morning, with a barrel of West Texas Intermediate for April delivery firmly above $56. The outlook for the commodity is improving both on the supply and demand side as OPEC members comply fully with agreed cuts while the easing of U.S.-China hostilities on commerce is boosting sentiment. The recent volatility in oil prices has helped European energy traders earn seven-figure bonuses, with those surveyed by Bloomberg expecting a 20 percent increase this year.
What we've been reading
This is what's caught our eye over the weekend.
- Odd Lots: How the Canadian cannabis market is working out so far.
- Mueller’s final report will ignite an epic war over disclosure.
- Bill Gross sees “much less” alpha in era of QE and quant trading.
- Robot workers can’t go on strike, but they can go up in flames.
- This time it’s different: China stocks edition,
- The euro area has a budding feel-good story, if the ECB wants to wait.
- The hipster effect: Why anti-conformists all end up looking the same.
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