Five Things You Need to Know to Start Your Day
Get up to date on what’s moving the markets this morning.
(Bloomberg) --
Australia's housing market is suddenly heating up. Pakistan halts bilateral trade with India as Kashmir spat intensifies. And Cathay Pacific starts to feel the heat of Hong Kong’s protests. Here are some of the things people in markets are talking about today.
Buyers Return
After a two-year slide, Australian house prices look to have bottomed out, sending buyers flocking back to the market. Home values in Sydney have risen in each of the past two months, according to CoreLogic, ending a slump that saw prices tumble 15% from their July 2017 peak. Driving the turnaround: the central bank’s back-to-back interest rate cuts in June and July, which have pushed mortgage rates to record lows; the regulator’s loosening of mortgage stress tests; and the surprise re-election of Scott Morrison’s government in May, which killed off the opposition Labor party’s plans to wind back tax breaks for property investors.
Late Turnaround
Asian stocks looked set for a muted open as investors assessed the implications of the latest central bank moves to bolster growth. U.S. equities and benchmark Treasury yields mounted a turnaround late in the day, reversing sharp declines. Japanese futures rose, while they dipped in Australia and were little changed in Hong Kong. Earlier, the S&P 500 Index recovered from a decline of as much as 2% to eke out a modest gain. Oil extended a decline after Brent crude closed in a bear market on Tuesday. It clawed back losses in after-hours trading in New York after Saudi Arabia contacted fellow crude producers to discuss ways to halt the slide in prices.
Spat Worsens
Pakistan downgraded diplomatic relations and halted bilateral trade with India after New Delhi revoked Kashmir's autonomous status. Prime Minister Imran Khan said his government will take the matter to the UN Security Council and ensure the army remains vigilant. Indian Prime Minister Narendra Modi’s decision on the disputed Muslim-majority state of Kashmir fulfilled a campaign promise made to his Hindu base, which opposed special treatment for the region.
Bookings Down
The economic fallout from the political protests in Hong Kong is broadening, with Cathay Pacific being the latest to say its business is taking a hit. Ticket sales dipped as fewer people took Cathay flights into Hong Kong in July, and the demonstrations are hurting future bookings as well, the carrier said. The toll on commerce is rising as the unrest turns increasingly violent. What started as a protest two months ago over a contentious law has morphed into a movement against China’s grip on the city. Here’s what could happen next.
Too Proud?
Donald Trump stepped up his assault on the Fed, renewing his demands for "bigger and faster" rate cuts. "Incompetence is a terrible thing to watch," he wrote in a series of tweets that shrugged off concerns about China. “Our problem is a Federal Reserve that is too proud to admit their mistake of acting too fast and tightening too much." At least one policy maker sounds sympathetic to the president. Chicago Fed President Charles Evans said developments since last week's rate cut may indicate economic headwinds that warrant more easing.
What we’ve been reading
This is what’s caught our eye over the last 24 hours.
- Japanese consumers are helping to prop up the economy
- Samsung unveils the Galaxy Note 10 in latest challenge to the iPhone
- For currency traders, China’s yuan fix is unmissable
- This week has already produced three bad signs for Donald Trump’s reelection
- China rejects one demand that could ease Hong Kong’s protests
- How to switch careers, even when you have little experience
To contact the editor responsible for this story: Alexandria Arnold at abaca3@bloomberg.net, Alex Millson
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