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Warnings signs for China stocks, Google parent Alphabet’s revenue misses expectations amid disappointing sales, and Boeing says it didn’t mean to deactivate a pilot alert on the 737 Max. Here’s what’s moving markets.
Warning Signs for China Stocks
Investors are running out of reasons to chase the bull market in Chinese stocks. After adding as much as $2.5 trillion to share values and outpacing gains everywhere else in the world, the rally in China is starting to look tired. Headwinds include an uninspiring earnings season, as well as the likelihood that Beijing will pursue a less aggressive stimulus policy than anticipated. Talks with the U.S. on trade also resume this week. Some of the hottest trades have already started to unravel in the past two weeks, including brokers, small caps and stocks with links to next-generation telecom networks, and analysts say there could be more pain ahead.
Boeing Cockpit Alert Statement
Boeing has acknowledged that a cockpit alert notifying pilots of a sensor malfunction linked to two fatal accidents wasn’t working as represented on every 737 Max. The planemaker said it didn’t deactivate a warning that was supposed to show conflicting readings between two angle-of-attack vanes. But the alert only functioned on jets that had a separate indicator display — available for a fee — with readings from the sensors, Boeing said in a statement Monday. The company is working to convince airlines and regulators that the Max will be safe once an update is installed to so-called MCAS software, which played a role in both accidents after being activated by erroneous angle-of-attack data from a single sensor.
Asian stocks are set to drift Tuesday ahead of key China data that will provide clues on global economic growth. U.S. stocks hit another record high on Monday, but pared gains ahead of Alphabet’s report. Hang Seng and Nikkei futures are also pointing to a higher open. Treasury yields rose after a large five-year block sale. Most G-10 currencies gained versus the dollar; the yen declined. Crude rebounded in a volatile session amid worries over disruptions to Iranian oil, while gold fell. And a reminder: Japanese markets are closed for the week.
Google Parent Earnings Disappoint
Alphabet’s first-quarter revenue missed, sparking concern advertisers are shifting some spending from Google to digital rivals. Sales came in at $29.5 billion, excluding payments to distribution partners. Wall Street was looking for $30.04 billion. Shares fell more than 7 percent in late trading. One slightly wobbly quarter doesn’t detract from Google’s impressive track record of steady growth since its rough patch several years ago. Tech investors, however, are an anxious lot in these late days of U.S. economic expansion and extra scrutiny of tech companies’ power.
It’s Getting Crowded in Jakarta
Indonesia plans to relocate its administrative capital from Jakarta, with the move set to take up to a decade and cost as much as $33 billion. President Joko Widodo ordered ministers to formulate a financing plan for the move, with private investment set to play a key role. The plan envisages relocating government and its executive branch, ministries and the parliament while retaining the central bank as well as trade and investment functions in Jakarta.
What We’ve Been Reading
This is what’s caught our eye over the last 24 hours.
- Goldman says it hasn’t discussed a 1MDB guilty plea with the DOJ.
- Japan’s Emperor Akihito steps down today.
- Anadarko will resume takeover talks with Occidental.
- What oil at $100 a barrel would mean for the world economy.
- WeWork filed for a U.S. IPO, likely the second biggest of the year.
- Woodstock backer pulls plug on 50th anniversary music festival.
- One in seven homes in Japan is empty.
©2019 Bloomberg L.P.