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Five Things You Need to Know to Start Your Day

Five Things You Need to Know to Start Your Day

(Bloomberg) --

Chinese tech companies blacklisted, the World Bank is now worrying, and Boris gets a boost. Here are some of the things people in markets are talking about today.

Blacklisted

Eight Chinese technology companies were placed on a U.S. blacklist on Monday by the Trump administration, which accused them of being implicated in human rights violations against Muslim minorities in China’s far-western province of Xinjiang. The companies include two video surveillance companies — Hangzhou Hikvision Digital Technology Co. and Zhejiang Dahua Technology Co. — that by some accounts control as much as a third of the global market for video surveillance and have cameras all over the world. The timing is provocative, coming just days before China’s Vice Premier Liu He is scheduled to arrive in Washington for high-stakes trade talks being watched by financial markets around the world. But Trump argued “There’s a chance that we could do something very substantial” with the talks. Separately, the president also warned China that if the country does anything “bad” to quell protests in Hong Kong, trade negotiations with the U.S. would suffer. 

Mixed Markets

Asian stocks look likely to trade mixed after a weak U.S. session as investors mulled the upcoming U.S.-China trade talks. Treasuries slipped and the dollar gained. Investor focus will be on Chinese markets, which reopen after a weeklong holiday, as well as those in Hong Kong after escalating violence in the city. The S&P 500 Index ended the day lower after bouncing between small gains and losses in light volume, and the lira slumped the most since August, after Trump threatened to “destroy” Turkey’s economy if it acts in excess in a military operation targeting Kurdish forces in Syria. Elsewhere, oil was at $52.80 a barrel, and gold traded at $1,493.36 an ounce after falling 0.7%.

World Bank Worries

The World Bank is the latest voice to join the chorus of gloom over diminishing global growth prospects. At a Monday speech ahead of the the IMF and World Bank annual meetings, the bank’s president, David Malpass, said the global economic outlook is deteriorating amid Brexit-related uncertainty, trade tensions and a downturn in Europe.  The world economy now looks even weaker than the bank’s June forecast for 2.6% growth in 2019, and the IMF has also indicated it may lower its 2019 outlook from after the fund in July projected 3.2% growth – the lowest since the financial crisis. The IMF is preparing to release its updated forecast next week. 

Boost for Boris

As Brexit negotiations resumed in Brussels, Boris Johnson got a boost from the courts. A Scottish judge ruled in the prime minister’s favor in a case that could have forced him to obey a law requiring him to delay Brexit if he can’t reach a deal. But the lift may only be short-lived. The judge ignored the prime minister’s frequent assertions he won’t seek an extension and instead relied on assurances from government lawyers that he would obey the law. That may make it harder for Johnson to leave without a deal on Oct. 31. Meanwhile, pound traders are turning increasingly bullish on the currency’s prospects into the Oct. 17-18 European Union summit, derivative prices show. Demand has picked up for options targeting a stronger sterling in the short term – two-week pound-dollar risk reversals, the premium on bullish options over bearish ones, are set for the highest close since May.

Trump Tells Turkey

Donald Trump appeared to backpedal after giving Turkey a green light to attack U.S.-allied Kurdish forces in northern Syria, warning Ankara in a tweet that he would “totally destroy and obliterate” the country’s economy if it takes unspecified “off limits” actions. The president drew fierce criticism Monday from congressional allies for a White House statement the previous night that the U.S. wouldn’t stand in the way of a Turkish incursion into Syria. That announcement, which followed a call with Turkish President Recep Tayyip Erdogan, marked an abrupt change in U.S. stance. Senator Lindsey Graham, a South Carolina Republican who is normally a close Trump ally, said the president’s position risks a comeback by Islamic State.

What We’ve Been Reading

This is what’s caught our eye over the past 24 hours.

To contact the editor responsible for this story: Alyssa McDonald at amcdonald61@bloomberg.net

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