ADVERTISEMENT

Five Things You Need to Know to Start Your Day

Get up to date with what’s moving global markets this morning. 

Five Things You Need to Know to Start Your Day
A demonstrator throws a brick towards the Cheung Sha Wan Government Offices during a protest in the Sham Shui Po district of Hong Kong, China. (Photographer: Paul Yeung/Bloomberg)

(Bloomberg) --

Tensions in Hong Kong are rippling out into broader markets, Trump had another “meltdown,” and we’re agonizingly close to a Brexit deal. Here are some of the things people in markets are talking about today.

Global Repercussions

The worst political crisis in Hong Kong since its return to China had largely just affected local stocks — until now. Traders are waking up to the reality that the pro-democracy Hong Kong protests are now showing up in broader markets, after the U.S. House passed a bill that would enforce sanctions against officials “responsible for undermining fundamental freedoms and autonomy in Hong Kong.” Treasuries rallied and the yen strengthened on haven demand after China threatened unspecified “strong countermeasures” if Congress enacted the legislation. That warning note seems to have fallen on deaf ears in the Senate, as Republican senators said Wednesday they want to move quickly on it. Meanwhile, a prominent Hong Kong activist was assaulted by men wielding hammers on Wednesday evening. And here’s a prescription for how to save the city’s troubled economy. 

“Meltdown”

A White House meeting between President Donald Trump and congressional leaders to discuss the situation with Turkey and Syria broke up amid insults and arguments, Democratic leaders said. House Speaker Nancy Pelosi said Trump appeared to be “shaken” by the fact that 129 GOP lawmakers voted earlier in the day for a resolution rebuking the president for withdrawing U.S. forces from Syria. His subsequent “meltdown” prompted her and other Democratic leaders to leave. Senate Democratic leader Chuck Schumer said Trump, who has come under intense criticism even from allies over Syria, called Pelosi “a third-rate politician” and hurled other insults in a “nasty diatribe.” Republicans countered that Pelosi and Schumer stormed out the meeting for political reasons, saying the speaker’s proclivity for abruptly leaving discussions was unproductive. 

Markets Mixed

Asian stocks were set for a mixed start Thursday after a weak U.S. consumer report triggered a rally in Treasuries. U.S. equities earlier edged lower. Futures were flat in Japan, contracts rose in Hong Kong and pointed lower in Australia, while the S&P 500 Index slid as energy and technology shares retreated. The dollar and Treasury yields slipped after an unexpected drop in retail sales boosted market pricing for an October rate cut by the Federal Reserve as earnings season ramps up. Elsewhere, the pound strengthened amid signs a Brexit deal may be imminent, and Turkish stocks fell with the lira after the U.S. brought a criminal case against one of the nation’s largest banks. Oil rose 0.3% to $52.97 a barrel, and gold was at $1,490.15 an ounce.

Bordering on Brexit

European leaders are getting ready to gather in Brussels to clinch a deal that will see the U.K. part ways with the European Union. There are signs an agreement can be reached after progress on the stubborn sticking point of the customs border with Ireland. But issues remain, specifically relating to the levying of sales tax. And it’s looking like Brexiteers may tolerate British Prime Minister Boris Johnson’s deal. Democratic Unionist Party Leader Arlene Foster dismissed as “nonsense” a report that her party was close to dropping its opposition to Johnson’s latest proposals. The prime minister will need the DUP’s support if he is to get a deal through Parliament. But is that enough? We’ve done the math to work out whether Johnson is indeed able to get the numbers to pass his deal through Parliament.

Shorts Off

Investors should think twice before betting against China’s currency, according to the most accurate yuan forecaster. Zhou Hao, an economist at Commerzbank AG, said there is a risk the yuan may strengthen past 7 per dollar in the near term. Just months ago the currency breached the symbolic level for the first time since the global financial crisis, which in turn prompted the U.S to label China a currency manipulator and stoked fears of capital outflows. The market has not priced in the possibility that China and the U.S. reach a more concrete deal in their dispute, meaning the currency may be vulnerable to sudden gains, Zhou says. Now, market watchers are split on what an advance beyond the 7 level would lead to.

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

©2019 Bloomberg L.P.