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Good morning. The EU is studying that phase-one trade agreement, Chinese growth is stabilizing and there’s another $1 trillion company in town. Here’s what’s moving markets.
Trade War Challenge
Just when you thought you could take a trade-war news break as the U.S. and China signed the phase-one trade agreement, the European Union threatened a challenge to the World Trade Organization. At issue is whether a pledge by China to increase purchases of U.S. goods by at least $200 billion over the next two years is WTO-compatible. If the European Commission has legal concerns after studying the pact, it would need weeks or months to discuss the next steps with the EU’s national capitals. Maybe Deutsche Bank CEO Christian Sewing was on to something Thursday when he said the U.S.-China conflict will be one of the biggest trends shaping the new decade.
The world’s second-largest economy got some good news on the growth front: gross domestic product rose 6% in China in the final quarter of 2019 from a year earlier, stabilizing after slowing to the weakest pace in almost three decades. Investment accelerated for the first time since June, which signals that a firmer recovery could be under way. That phase-one trade deal has improved the outlook for Chinese factories and exporters this year, though uncertainty remains around implementation. Chinese stocks were little changed.
And then there were three: Alphabet Inc. became the third U.S. tech company with a $1 trillion valuation, trailing only Apple Inc. and Microsoft Corp. Alphabet, which closed Thursday at $1,451.70 a share, may have further to go, according to analysts at Deutsche Bank who this week assigned the stock a street-high view of $1,735 per share. Amazon.com flirted with the trillion-dollar level last year, but now needs a rally of more than 7 percent to get it across the line. Globally, however, it’s oil that reigns supreme: Saudi Aramco tops the valuation charts after its initial public offering.
Four potential competitors of Facebook Inc. sued the social media company, accusing it of anticompetitive behavior and asking a judge to order CEO Mark Zuckerberg to give up control. The group called Facebook “one of the largest unlawful monopolies ever seen in the United States,” and also claimed that if Facebook isn’t forced to sell its Whatsapp and Instagram assets, it will integrate them into the social network and consolidate its market power across the globe. Facebook said the claims are “without merit.”
Asian stocks edged up on Friday, with the global record-setting rally showing little indication of letting up amid the improving Chinese economy and signs of strong American consumer demand. Treasuries dipped after the U.S. announced plans for a new 20-year bond. In Europe, Richemont just posted third-quarter sales growth of 4%, matching estimates. Later we'll get an update from gambling company GVC Holdings Plc and December U.K. retail sales. It’s also worth watching French retailers after Casino slashed its forecast for full-year operating profit in France after the close of market Thursday.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- No one makes money like Leon Black.
- Identify the bots: How Musk would fix Twitter.
- One in 100: the odds of Huawei CFO beating U.S. extradition.
- Jaime Botin sentenced to prison for Picasso smuggling.
- 119 billionaires set to descend on Davos.
- Lesotho prime minister to resign amid probe of wife’s murder.
- Boris Johnson’s Big Ben bong blunder.
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