Five Things You Need to Know to Start Your Day
Japan’s Shinzo Abe wants in on the Trump-Kim summit; oil extends its slump; Italy’s populists call for demonstrations. Here are some of the things people in markets are talking about.
Abe Wants in on the Summit Too
U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe are planning to get together before the “expected meeting” between Trump and North Korea's leader, Kim Jong Un. That may happen at the G-7 conference in Quebec June 8-9, the Washington Post reported. The U.S. has decided to hold off on implementing major new sanctions on North Korea while attempts to revive the summit are under way, and South Korean President Moon Jae-in is “considering the possibility” of traveling to Singapore for a three-way summit with Kim and Trump next month.
Oil Extends Its Slump
Oil in New York headed for its longest run of losses in more than three months as Saudi Arabia and Russia consider raising output. Futures dropped as much as 3.1 percent Monday, following a 4 percent slump Friday. Saudi Arabia and Russia have signaled they’ll restore some of their curtailed output after OPEC and allied producers concluded they’ve succeeded in draining a global glut. The rout that started last Tuesday has wiped out all of oil’s gains in May. Higher crude prices are starting to affect demand, Daniel Yergin, vice chairman of consultant IHS Markit Ltd., said on Friday.
Stocks Poised to Open Lower
Asian stocks are poised to open lower after risk appetite withered in Europe with Italy lurching toward fresh elections. During the European day, the region’s shares and currency reversed early gains, while U.S. equity futures pared a jump even as the America-North Korea summit appeared to be back on track. The dollar rose to a more than five month high and the euro weakened. Treasury futures rose amid the risk-off sentiment. Data-wise, Tuesday is lacking any key Asian releases and most of Southeast Asia will be shut, while the U.S. and U.K. return after a Monday holiday.
China’s Shadow Bank Crackdown
Chinese regulators are making progress in their attempts to tame the country’s $10 trillion shadow banking sector, but after a one-year squeeze on the riskiest areas of the industry, there’s still a lengthy battle ahead. The best measure of success is last year’s reversal of the surge in shadow banking assets as a proportion of gross domestic product: the ratio has slipped from 87 percent of GDP in 2016 to 79 percent in 2017, according to Moody’s Investors Service. But China’s ever-inventive financial institutions have been seeking new ways around the rules in their quest for more funding.
Italy’s Populists Call for Demonstrations
Italy’s populist leaders, incensed by a failed bid for power, started mobilizing for early elections even as premier-designate Carlo Cottarelli set to work on a list of ministers to present to the head of state. The disconnect between the pro- and anti-European forces underscored the widening gulf in Italy’s fractured political landscape, with the leader of the anti-establishment Five Star Movement, Luigi Di Maio, setting the tone for a virulent campaign and calling for a demonstration in Rome on June 2. Yields on Italy’s two-year government bonds rose 40 basis points on Monday and Italian stocks dragged down other gauges across Europe.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- Stock exchanges in Singapore and India have abandoned trade link talks, sources say.
- Vietnam has gone from trader’s favorite to bear market.
- Malaysia’s prime minister will scrap a proposed multibillion-dollar high-speed rail link to Singapore.
- China’s drugmakers are making scorching gains.
- Sexual violence is holding back the rise of India.
- Subtropical Storm Alberto makes landfall in Florida.
- Freezer-tested boat drones are propelling one of China’s hottest start-ups.
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