Five Things You Need to Know to Start Your Day
Five Things You Need to Know to Start Your Day
(Bloomberg) --
Good morning. Equities edged higher in Asia overnight on the back of thin trading after the U.S. holiday. Reopened U.K. bourses will react to European election results from the weekend as well as the latest developments in the race to replace outgoing British Prime Minister Theresa May. Here's what's moving markets.
Not Ready
The U.S. isn’t ready to make a trade deal with China and American tariffs on Chinese goods “could go up very, very substantially, very easily,” Trump said on a state visit to Japan on Monday. China has tried to play down the impact of the trade war on its economy, saying higher tariffs will have a “very limited” impact, and would hurt the U.S. about as much. Meanwhile, questions are being asked over how the trade war could impact Chinese students' access to top U.S. universities, and Huawei Technologies Co.’s founder is remaining defiant in the face of U.S. sanctions that threaten his company’s very survival.
Higher But Muted
Stocks crept up in Asia on Tuesday, building on mainland Europe’s gain from Monday, with the escalation in U.S.-China trade tensions perhaps having been priced-in over the past few weeks, and volumes muted as investors enjoyed holidays in the U.K. and the U.S. Core sovereign bonds on the continent advanced after mainstream parties held their ground against populists in elections. But keep an eye on Italy again today, with the country potentially facing a $4 billion fine for failing to rein-in its debt.
Force of Farage
U.K. equity markets reopen for the first time since the European election results were revealed. Nigel Farage's Brexit party performed well, drawing former UKIP voters and disillusioned Brexiteers from the Conservatives and Labour, while the remain vote was split between other smaller parties that want to reverse the divorce. But with the eventual Brexit outcome likely to be decided in London rather than Brussels, it's unclear how influential the results will really be. Labour Leader Jeremy Corbyn has promised to give the public a vote on any Brexit deal.
Tory Tactics
Sajid Javid joined the lengthy list of Tories vying for the U.K. premiership. While now firmly in the pro-Brexit camp, the son of Pakistani immigrants backed remain in 2016. He's trailing several other candidates, including firm bookmakers favorite Boris Johnson, and Michael Gove, who’s pledged to offer British citizenship to 3 million European Union nationals if he moves into Downing Street. But whoever gets the job, they won't survive long if they push the case for a no-deal divorce, according to Chancellor of the Exchequer Philip Hammond. The pound was steady after slipping on Monday.
Coming Up...
European Union leaders are meeting in Brussels to discuss candidates who could run some of the organization’s key institutions. While Italy wants a say, who would you pick as European Central Bank boss if you could decide? On the data front, we’ll get euro-area economic confidence, while some foreign exchange traders will also have an eye on a rate decision from Hungary and economic growth statistics from Switzerland.
What We’ve Been Reading
This is what’s caught our eye over the weekend.
- World’s rarest cars on show at Lake Como.
- Meet the godfather of crypto.
- Danish election bets upended.
- The butterfly effect: what one species’ comeback can teach us.
- Counting the global cost of the trade war.
- Fiat-Renault mega-merger is born of desperation.
- The queue that claimed this woman’s life.
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