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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) --

Good morning. Brexit talks progress but hurdles remain, China makes a threat to the U.S. over Hong Kong and Neil Woodford’s downfall reaches a denouement. Here’s what’s moving markets.

DUP Hurdle

A Brexit deal is inching closer to being agreed to, with the U.K. said to have made a series of concessions in order to get on the same page as the European Union — yet as one has become acutely accustomed to, hurdles remain. The biggest for U.K. Prime Minister Boris Johnson is the Democratic Unionist Party, the Northern Irish group which had propped up Theresa May’s government and which Johnson needs on side to sell his accord. DUP leader Arlene Foster’s comments on Tuesday painted a bleak picture on that front. There are still plenty of issues to sort out, including the recurring question of Scottish independence, even if U.K. assets have been jumping for joy.

Hong Kong Threat

China has threatened unspecified “strong countermeasures” if the U.S. Congress enacts legislation which expresses support for Hong Kong protesters, dragging the turmoil in the city into the trade picture. This came as Hong Kong Chief Executive Carrie Lam was forced to suspend her policy speech in the face of pro-democracy protests, including a pledge to curb Hong Kong home prices amid the unrest. On home ground, China also unexpectedly pumped cash into its financial system ahead of data coming Friday likely to show a further slowdown in its economy and it unshackled daily yuan fixing, suggesting there may be some flexibility on its currency in the future.

Woodford’s Demise

The fall from grace for one of the U.K.’s best-known fund managers was complete as Neil Woodford said his investment house will shut down following his ouster from the flagship vehicle he was running. The move now opens the question of what will happen with his other funds, given the Equity Income wind down, and what this will mean for all the holdings in the portfolio. It’s a disastrous tale for the future of stock-picking managers in a world of increasingly passive investing and is drawing in some notable names. Woodford's downfall will continue to dominate conversation around London finance’s water coolers.

Dash for Cash

If there’s any topic that might trump Neil Woodford, flexible office firm WeWork is a strong contender. The company, following its ill-fated attempt to go public, is working to decide whether to sell a stake to backer SoftBank Corp. or take a hefty debt package from JPMorgan Chase & Co. to shore up its finances. Its bonds are now for the brave, and other SoftBank-backed real estate companies are trying to distance themselves from the WeWork shadow. Be assured, much more attention will be poured into determining what’s next for the firm.

Coming Up...

Asian stocks chased the gains of their U.S. counterparts on a bout of earnings optimism, though European and U.S. share futures are pointing to a negative open amid the increased tensions over Hong Kong. We’ll have more U.S. bank figures in the shape of Bank of America Corp. after a slew on Tuesday in which JPMorgan came out on top of its rivals, plus streaming giant Netflix Inc. will update the market after the close. In Europe, U.K. online clothing retailer Asos Plc reports. We’ll have inflation data from the U.K. and the euro area to digest, plus retail sales in the U.S. later in the day. 

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: Tom Lavell at tlavell@bloomberg.net

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