Five Things You Need to Know to Start Your Day
Here are some of the things people in markets are talking about.
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Malaysia’s election upset stuns investors. North Korea releases three Americans detainees. And the fallout from U.S. President Donald Trump’s withdrawal from the Iran nuclear deal continues. Here are some of the things people in markets are talking about.
Malaysian Election Surprise
Mahathir Mohamad won a stunning victory in Malaysia’s election, ending the six-decade rule of Prime Minister Najib Razak’s party in a landmark shift for the Southeast Asian nation. Mahathir, Malaysia’s longest-serving premier who defected to the opposition to take on Najib, will return to power at the age of 92. His four-party Pakatan Harapan alliance won at least 112 of 222 parliamentary seats in Wednesday’s vote, official figures from the election commission showed. The outcome may be bad news for investors who had bet on a Najib victory. The U.S. traded iShares MSCI Malaysia ETF dropped 6 percent to $32.40 Wednesday, the lowest since December, as trading volume jumped to $144 million, about six times the average daily turnover in the past year. Local markets are expected to be closed Thursday and Friday after the government declared public holidays.
North Korea Niceties
North Korea released three U.S. citizens who had been detained for as long as two years in a goodwill gesture ahead of a planned summit between President Trump and Kim Jong Un that’s expected in the coming weeks. The Korean-American men, who all have the common surname of Kim but are not related, immediately boarded a plane with Secretary of State Mike Pompeo, who was in Pyongyang to meet with Kim Jong Un and other top officials and lay the groundwork for the summit. Trump tweeted “date & place set” for the summit but said the location wouldn’t be the DMZ. He’ll announce the details “soon.”
Iran Fallout Continues
Global leaders continued to sound off on Trump’s scrapping of the Iran accord. The president warned of “very severe” consequences should Tehran restart nuclear activities that were halted as part of the 2015 agreement that the U.S. president abandoned on Tuesday. Russia’s Deputy Foreign Minister urged a summit between Trump and Vladimir Putin, saying a meeting is “extremely important” to safeguard global stability. Israeli Prime Minister Benjamin Netanyahu told President Vladimir Putin that Iran is out to destroy his country, pressing his appeal for Russian help to keep Tehran from using Syria as a launching pad to attack the Jewish state. Oil surged amid speculation the move could unravel the OPEC supply deal.
Wall Street Left Hanging for China JVs
International politics are looming large over the race among global investment banks to secure coveted permits for taking majority stakes in Chinese securities joint ventures. Switzerland’s UBS Group AG and Nomura Holdings Inc. of Japan in the past week became the first to apply for permission to buy 51 percent stakes in local securities JVs. Both banks acted after China’s securities regulator encouraged them to quickly submit applications, people with knowledge of the matter said. U.S. banks such as Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley weren’t likewise asked to seek approval, three of the people said. Amid escalating tensions with Trump’s administration over trade and investments, Beijing wanted to signal that getting majority control over local JVs could take longer for U.S. firms.
Coming Up...
Asian futures are pointing to a higher open after U.S stocks jumped. Ten-year Treasury yields rallied back above 3%, while the dollar’s climb took a pause. Inflation reports and central banks steal the economic spotlight in Asia Thursday. Chinese PPI and CPI are due in the Asia morning after a report showed wholesale prices in the U.S. rose less than forecast. U.S. CPI is due Thursday. New Zealand kicked off Asia central bank action by holding rates at a record low, with Malaysia and the Philippines due later Thursday. In Europe, the BOE is expected to hold rates steady.
What we’ve been reading
This is what’s caught our eye over the last 24 hours.
- Money managers are trying to make sense of a mysteriously mellow market.
- The gold market is greeting geopolitical turmoil with a yawn.
- Japan’s bitcoin king is poaching Wall Street talent.
- Bridgewater is outperforming peers this year even after losing money in April.
- Walmart’s Flipkart deal got a chilly reception from markets.
- Oops: Masayoshi Son accidentally confirmed that Walmart deal house before the official announcement was scheduled.
- The airline seat of the future will clean itself.
--With assistance from Garfield Clinton Reynolds
To contact the editor responsible for this story: Boris Korby at bkorby1@bloomberg.net.
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