Five Things You Need to Know to Start Your Day
Good morning. Alphabet Inc.’s quarterly numbers disappointed after U.S. stocks hit a record high, U.S-China trade talks are resuming, Brexit divisions are as clear as ever and WeWork Cos. has filed to go public. Here’s what’s moving markets.
Not Okay, Google
Google’s advertising revenue in the first quarter grew at the slowest pace since 2015, sending parent Alphabet shares tumbling 7 percent in after-hours trading. The company’s unwillingness to give much detail on the nature of the slowdown sparked concern that advertisers are shifting some spending to digital rivals. Elsewhere, South Korea’s Samsung Electronics Co. joined rivals in cautiously predicting a rebound in chip prices, while iPhone maker Apple Inc. reports this evening, and analysts are reluctantly bullish.
The U.S. S&P 500 rose to a record high on Monday as focus continues to shift from fears over economic growth to optimism over company earnings and international trade. Futures slipped overnight, however, with some skepticism over how long the rally can be maintained for. Markets may also be too complacent over the risk that further increases in oil prices spur inflation, according to Morgan Stanley Wealth Management. Futures slipped early on Tuesday and the dollar also edged lower.
U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are on their way to Beijing to continue talks. Significant issues are still unresolved but enforcement mechanisms that will aim to ensure each side sticks to an eventual deal are “close to done,” according to Mnuchin. Weak Chinese data greeted the negotiators as an official gauge of the manufacturing sector fell in April.
Brexit is coming back into focus following the well-needed break over the Easter period. U.K. Prime Minister Theresa May faces a challenge from activists in her Conservative Party after enough signed a petition opposing her leadership and Brexit strategy to force an emergency vote on her future. Meanwhile, the opposition Labour party remains split on whether to back a second referendum or merely keep it as an option on the table. The pound has edged higher over the past few sessions.
We’ve got bank earnings including scandal-hit Danske Bank A/S after Nordea Bank Abp’s quarterly net interest income missed estimates, and Spain’s largest lender, Banco Santander SA, reported better-than-expected profits driven by Latin America. Glencore Plc’s numbers will be the focus of commodities investors later. Euro-zone gross domestic product and unemployment also are on the schedule. The bloc's growth is expected to have steadied in the first quarter.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- The mystery of the millionaire hermit.
- WeWork confidentially files for IPO.
- Was the Fyre Festival cheese sandwich photo the real scam all along?
- Don’t make a $149 million bet while on live TV.
- Is this whale a Russian spy?
- Islamic State chief Abu Bakr al-Baghdadi appears in video.
- Mormon church wants this London building.
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