Five Things You Need to Know to Start Your Day
News that the Trump administration is set to press its trade war with China helped fuel a stunning reversal in U.S. stocks Monday. Here are some of the things people in markets are talking about.
The U.S. is preparing to announce by early December tariffs on all remaining Chinese imports if talks next month between presidents Donald Trump and Xi Jinping fail to ease the trade war, three people familiar with the matter told Bloomberg. An early-December announcement of a new product list would mean the effective date -- after a 60-day public comment period -- may coincide with China’s Lunar New Year holiday in early February. The list would apply to the imports from the Asian nation that aren’t already covered by previous rounds of tariffs -- which may be $257 billion using last year’s import figures, according to two of the people.
Epic Equity Reversal
U.S. stocks fell after the tariff report, with the S&P 500 flirting with a correction as technology shares tumbled and the dollar rallied. The S&P fell as much as 11 percent from its all-time high before paring the drop in the final 15 minutes of trading. The Dow Jones Industrial Average slid more than 500 points at its worst, dipping into a correction before closing down 1 percent. The Nasdaq 100 Index tumbled to the lowest level since May. The S&P 500 and Nasdaq indexes are on track for the steepest monthly declines of the record-long bull market. The potential for fresh U.S. tariffs on Chinese goods stoked anxiety in markets already under pressure by concerns from peak earnings growth to the end of easy money and rising rates. More than $8 trillion has been wiped off of global equities during a rout that’s now a month old.
China Eyes Auto Stimulus
China is considering a tax cut to revive its flagging automotive market, according to people familiar with the matter, lending support to a key industry that’s been damaged by the ongoing trade war with the U.S. Carmaker shares surged after Bloomberg News reported the proposal, which would stimulate a market they’ve increasingly relied on for growth. Volkswagen AG, selling just under 40 percent of its vehicles in China last year, rose as much as 6.9 percent, the biggest intraday move since July 2016. Ford Motor Co. and General Motors Co. rallied in U.S. trading, while BMW AG and Daimler AG gained in Germany.
End of Airplane Golden Age
The loss of a Boeing Co. 737 Max jet that plunged into the sea off Indonesia underscores the close of one of the safest periods for western-built airliners since the dawn of aviation. Monday’s crash of a Lion Air plane carrying 189 people was the fourth deadly incident since April involving a 737. Before then neither Boeing nor Airbus SE had lost an aircraft since an EgyptAir A320 came down in the Mediterranean in May 2016, killing 66, a gap of close to two years. The airliner that crashed Monday in waters near Jakarta was plunging at hundreds of miles an hour in its final seconds, according to preliminary data transmitted by the plane that could aid investigators looking for a cause.
Aussie Banks Buckle
Australia’s big banks are set for their worst earnings season since the global financial crisis. A softening housing market, margin pressure from rising funding costs, and the ballooning cost of dealing with the fallout from an inquiry into misconduct in the financial industry, are all squeezing profits. Australia & New Zealand Banking Group Ltd. and National Australia Bank Ltd.are expected to report their first declines in full-year cash profit since 2016, while Westpac Banking Corp. earnings may rise just 1 percent as the banks take charges of more than A$800 million ($565 million) for the cost of wrongdoing, including compensating customers.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- China turns to share buybacks to help rescue its market.
- Angela Merkel says she won’t-seek re-election as the leader of her party.
- Warning of "bloodshed" in Sri Lanka's political crisis.
- Duterte orders military takeover of customs after meth smuggling.
- Bitcoin's long-term trend lines suggest downswing isn't over.
- Malaysia begins the auction of a $250 million luxury yacht.
©2018 Bloomberg L.P.