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Five Things You Need to Know to Start Your Day

Get up to date with all that’s moving the markets. 

Five Things You Need to Know to Start Your Day
Workers sweep up rubbish as graffiti on the road read “Liberate Hong Kong” in Chinese characters the morning after clashes between the police and demonstrators during a protest in the Sheung Wan area of Hong Kong, China. (Photographer: Paul Yeung/Bloomberg)

(Bloomberg) --

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.

Drug Deal

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.

To contact the editor responsible for this story: Alexandria Arnold at abaca3@bloomberg.net, Alex Millson

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