Five Things You Need to Know to Start Your Day
Carrie Lam gets China’s support after saying the Hong Kong protests have gone too far. The Trump administration’s call for Japan to help guard the Strait of Hormuz puts Shinzo Abe in an awkward position. And a new drug merger is changing the Big Pharma landscape. Here are some of the things people in markets are talking about today.
Lam Gets China Backing
China backed up Hong Kong Chief Executive Carrie Lam and the city's police, with the Hong Kong and Macau Affairs Office asserting demonstrations have gone “far beyond” peaceful protest. Opposition lawmakers said Beijing had done little to resolve the underlying political crisis, and instead was seeking to shift blame to radical protesters, Western countries and the foreign media.
Protests Weigh on Stocks
The unrest is also taking its toll on stocks. Investors yesterday sold shares at the fastest clip in more than six weeks after protesters clashed with police for an eighth weekend. While Hong Kong’s financial markets have been surprisingly resilient, traders are losing faith as the violence threatens to disrupt the local economy. Office and residential property companies, as well as shopping malls, are taking the biggest hit.
Asian Stocks Hold Steady
Asian equity futures showed surprising backbone after U.S. stocks edged lower as Amazon, Facebook, Alphabet and Netflix all fell. The 10-year Treasury yield dipped for a second day to 2.07% before the Fed's anticipated rate cut Wednesday. The dollar climbed, while the pound slid to its lowest level in more than two years. Oil and gold were both higher.
Abe’s Tight Spot
U.S. calls for Japan’s help to protect shipping from Iranian attacks have put Prime Minister Shinzo Abe in a bind between angering Donald Trump and upsetting voters suspicious of overseas deployments. The stakes are high: Japan gets 80% of its crude imports from the Middle East, much of it through the Strait of Hormuz, but the Japanese public remains sharply divided over any deployments. “Abe is frightened of public opinion on security issues and is frightened of angering Trump,” said Garren Mulloy, a professor at Daito Bunka University in Saitama, Japan.
The pharma landscape is getting a makeover. Pfizer will merge the unit that makes Lipitor and Viagra with Mylan to form a new company in a deal that reshapes the brand-name and off-patent drug industries. The new company will have sales of close to $20 billion in 2020 sales, as well as about $24.5 billion in debt and an investment-grade credit rating. Oh, and don’t look for longtime Mylan chairman Robert Coury to ride off into the sunset.
What we’ve been reading
This is what’s caught our eye over the last 24 hours.
- Hong Kong police strain under pressure to solve political crisis
- Citi plans hundreds of trading job cuts as revenue declines
- Hedge fund fights over stem-cell company's value in Cayman court
- Rising South China Sea tensions cast shadow over Asean summit
- Porsche’s battery-powered Taycan on track to overtake the 911
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