Stock Markets Fell on Thursday as Worries Grew About a Second Wave of Coronavirus Infections

Stock markets fell and bonds were in demand on Thursday as worries grew about a second wave of coronavirus infections and a dour assessment from the head of the U.S. Federal Reserve dashed hopes for a quick economic recovery.

“The path ahead is both highly uncertain and subject to significant downside risks,” Fed Chair Jerome Powell said in a webcast speech.

He warned of a recession worse than any since World War Two, and called for additional fiscal spending to stem the fallout from the pandemic – a pointed comment from a central banker who has avoided giving advice to elected officials.



New outbreaks in South Korea and China were cause for concern, even as more countries begin to re-open their economies after lengthy lockdowns.

European stock futures were down, and every market in Asia fell. Bonds and the dollar held ground won overnight.

FTSE futures (FFIc1) and EuroSTOXX 50 futures (STXEc1) dropped about 0.5%, while futures for the S&P 500 (ESc1) struggled to lift much above flat.

MSCI (NYSE:MSCI)’s broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) fell 1%.

“We don’t think the market is going to re-test the lows, but it’s probably seen its best also, so I’m expecting a correction,” said Tony Huntley, chief investment officer at Melbourne-based fund manager Adansonia Capital.

“The issue is whether we get a second wave (of infections) … that would be my greatest fear.”

China has re-imposed movement restrictions near its borders with North Korea and Russia after a new outbreak was detected there and South Korea is working to contain an outbreak centred around bars and nightclubs in Seoul.

“It is important to put this on the table: this virus may become just another endemic virus in our communities, and this virus may never go away,” WHO emergencies expert Mike Ryan told an online briefing on Wednesday.

Bonds and the dollar rallied after Powell talked down the prospect of negative interest rates in the United States, and extended gains on Thursday. Yields on benchmark U.S. 10-year Treasuries (US10YT=RR) fell slightly to 0.6395%.

A surprise drawdown of U.S. inventories helped oil prices make meagre gains, but the bleak outlook capped rises.

Gold pulled back from a one-week high hit early in the Asian session, but held comfortably above $1,700 an ounce at $1,711.20.

Markets are looking ahead to the release of the European Central Bank’s latest economic bulletin at 0800 GMT and the latest U.S. jobless claims data at 1230 GMT.

SLOW GOING…

Equity markets have wavered since April’s rally as investors and authorities try to weigh the risks of re-starting economies quickly against the financial ruin that lockdowns have wrought, while worrying about a flare-up infections.

Australian jobless data bought the latest sign of doom, with a record plunge in employment dragging the currency to a one-week low of $0.6420.

Already bleak expectations and strong demand for Aussie bonds kept it from steeper falls. In the United States, the Trump Administration is pressing on with re-opening plans despite urgings of caution from medical experts.

“We’re going to slowly open the economy,” U.S. Treasury Secretary Steven Mnuchin told Fox News on Wednesday.

“But there is also a risk that we wait too long, there is a risk of destroying the U.S. economy and the health impact that that creates.”

Caution is also prevailing in Europe and the Antipodes, where restrictions are beginning to relax. “Global markets are still licking their wounds, and while equities remain robust, gains are slowing,” said Societe General FX strategist Olivier Korber.

“A second pandemic wave is unfortunately not a tail risk, so the full extent of the economic damage may be underestimated,” he said, recommending a long position in euro/kiwi (EURNZD=) which has gained nearly 9% this year as market volatility has increased.


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Elsewhere a strong greenback pushed the kiwi to a three-week low of $0.5968 and had the euro and pound under pressure. Brent crude (LCOc1) firmed slightly to $29.36 per barrel and U.S. crude (CLc1) was up 1% at $25.58 per barrel.



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Bristol-Myers Squibb Co. agreed to acquire Celgene Corp. in a deal valued at about $74 billion, bringing two of the top-selling cancer drugs under one roof


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By Aisha Al-Muslim | @AishaAlMuslim

Bristol-Myers Squibb to Acquire Celgene for About $74 Billion. Overall, the merged company will have nine products with more than $1 billion each in annual sales—most notably Celgene’s multiple myeloma drug Revlimid, which had $7.1 billion in sales through the first nine months of 2018, and Bristol’s lung-cancer treatment Opdivo, which had $4.9 billion over that same period.

The companies said their pipeline includes six expected near-term product launches representing more than $15 billion in revenue potential.

Both companies, though, have had setbacks recently. In October, Bristol announced a delay in a decision by the U.S. Food and Drug Administration to rule on its new drug application for a combination of Opdivo with another Bristol-Myers drug, Yervoy. Meanwhile, Celgene’s share price fell 39% last year following its $9 billion acquisition of Juno Therapeutics Inc. and concerns about Revlimid losing patent protection in the U.S.

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Under the deal, Celgene shareholders will receive one Bristol-Myers Squibb share and $50 in cash for each share of Celgene.

Celgene shareholders will also receive one tradable Contingent Value Right for each share of Celgene. Each CVR will entitle its holder to receive a one-time potential payment of $9 in cash upon FDA approval of three drugs. A CVR is often used when buyers and sellers can’t agree on a purchase price and typically tied to sales or regulatory targets.



The cash-and-stock deal represents about a 54% premium, based on the closing stock price of Celgene on Wednesday. The cash portion will be funded through a combination of cash on hand and debt financing. The deal is expected to close in the third quarter.

When the deal is completed, Bristol-Myers shareholders would own about 69% of the combined company, while Celgene shareholders would own about 31%.


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Bristol-Myers’s Chief Executive and Chairman Dr. Giovanni Caforio will continue to serve in those roles of the combined company. Two members from Celgene’s board will be added to the Bristol-Myers board.

Global Stocks Open 2019 With a Tumble Over Weak Chinese Data


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by Avantika Chilkoti

Global stock markets fell on the first trading day of 2019 on deepening fears of a slowdown in the Chinese economy, extending a turbulent period for equities. The Stoxx Europe 600 was down 1% in Wednesday midmorning trade. France’s CAC 40 lost 1.8% and the U.K.’s FTSE 100 fell 1%.

U.S. stock futures pointed to opening falls of 1.4% and 1.5% for the S&P 500 and the Dow Jones Industrial Average, respectively. The downbeat mood across markets followed a tumultuous holiday period, when U.S. indexes seesawed. Nervousness over trade, the health of the U.S. economy and the path of interest rates from the Federal Reserve have driven skittish trading world-wide.

Analysts at Jefferies pointed to a “perfect” storm in the final months of 2018, including high oil prices, a strong dollar and an upward shift in the U.S. yield curve, which left markets in flux.

Still, Sean Darby, chief global equity strategist at Jefferies, said investors seem to have already priced in a recession this year, and that lower oil prices will help many major economies. Recent concessions between the U.S. and China on trade, he said, also mean worries over a protracted dispute are unfounded.

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“What is worrying people is that they can’t actually pinpoint what is spurring this selling,” Mr. Darby said. “There is somebody out there, one or two players, who I suspect are in an unenviable position where there must be forced selling.”

The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was broadly flat. The 10-year U.S. Treasury yield ticked down to 2.663%, from 2.684% at the close of 2018. Yields move inversely to prices.

In Asia, weak Chinese economic data sent markets lower. The China Caixin manufacturing purchasing managers index fell to 49.7 in December, according to data released Wednesday. That is the first time the sector has been in contraction territory—below 50—since May 2017.


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Hong Kong’s Hang Seng Index led regional declines, falling 2.8%. The Shanghai Composite Index dropped 1.2% and Australia’s S&P/ASX was down 1.6%. Japanese stocks were closed for a public holiday.

The worst is yet to come. Looking ahead, we see more headwinds to growth from weakening domestic demand, the ongoing credit downcycle, a cooling property sector and lingering China-U.S. trade tensions,” said Nomura analysts.

Among the worst-performing stocks Wednesday were those whose health depends on the Chinese property market. China Overseas Land & Investment fell 5.6% and Country Garden Holdings fell 6.1%.

The continued economic weakness is raising expectations that Beijing will soon enact some form of stimulus, which some analysts hope would jolt markets out of their 2018 funk. The country’s Shanghai Composite Index dropped nearly 25% last year.

The Chinese economy has been buffeted by both domestic and external factors. Beijing’s attempts to rein in the country’s ballooning debt pile and tariffs applied by the U.S. government have taken a bite out of the country’s famous growth rates.

Goldman Sachs China economists expect more cuts to the reserve-requirement ratio, a main policy tool of the People’s Bank of China, during the first half of the year. Any rate cuts would likely be good news for the Chinese government bond market, which was a hit with international investors in 2018. It was one of the few asset classes world-wide to provide positive returns last year.

Fiscal stimulus would also likely come through China’s local governments, which have helped fuel the country’s debt binge since 2008. The sustainability of that increase has been a major concern for analysts and investors.

“At present markets are worried about weak Chinese growth and the improved data we expect as stimulus starts to impact the economy will allay these fears,” said Eric Fishwick, head of economic research at CLSA.

But that boost is likely to be short-lived, according to Mr. Fishwick. Stimulus will detract from Beijing’s focus on high-quality growth and renew fears that the expansion is too dependent on debt. “As growth quantity worries dissipate, the deterioration in quality will attract increasing attention,” he said.

Investors should be careful as the recent spike in market volatility is far from normal, according to the manager of the California State Teachers’ Retirement System


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Investors should be careful as the recent spike in market volatility is far from normal, according to the manager of the California State Teachers’ Retirement System, which has more than $200 billion in assets.

“The last few days have been abnormal volatility,” Christopher Ailman, chief investment officer at CalSTRS, told CNBC during a special aired Thursday night. “The volatility we saw earlier in October and November, I went on and said that was expected. That’s typical when you have a bull market that’s so old and so late in the economic cycle. But the last few days are abnormal because the machines are really picking over more than human beings.”

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Ailman’s comments came after another wild session on Wall Street. The Dow Jones Industrial Average closed 260 points higher on Thursday, erasing a 611-point plunge from earlier in the day. Thursday’s rally also follows a historic day in the U.S. stock market Wednesday, with the bluechip index posting its biggest one-day points gain in history.

Those moves took place after Wall Street logged its worst Christmas Eve performance ever on Monday. “That’s normally a quiet day and that was crazy to see that decline,” Ailman said.


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Investors have been on edge lately as they worry about a possible monetary policy mistake from the Federal Reserve, an ongoing U.S. government shutdown, U.S.-China trade talks and a possible economic slowdown.


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But Ailman says investors should look at the bond market for clues about the economy rather than stocks.

Investors sold Italian bonds and the euro on Friday, with Italy’s bond yield hitting four-year highs as the European Union called its draft budget an “unprecedented” breach of EU fiscal rules.


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EU authorities will send a formal warning letter that could lead to Brussels rejecting the draft before the end of the month. While it isn’t unusual for the EU to ask member countries for clarification on points of their budget plans, the sending of a formal letter and the tone of the comments were particularly strong, analysts said.

“The letter was more sharply worded than usual. It described the budget as ‘an obvious deviation’ from prior commitments, on an ‘unprecedented’ scale,” Deutsche Bank (DE:DBKGn) research strategist Jim Reid said in a note to clients.

Italy’s benchmark 10-year bond yields rose to 3.74 percent in early trade on Friday, the highest since February 2014. The closely watched Italian/German bond yield spread hit a fresh 5-1/2 year high of 332 basis points.

Portuguese and Spanish bonds, that have been resilient so far through the Italian budget worries, were also sold, with several analysts suggesting that this was the first sign of contagion from Italy. [GVD/EUR]

Italian stocks tumbled nearly 1.4 percent, while its bank stocks in particular fell almost 3 percent. The news also weighed on the euro, which fell to a two-month low. [FRX/] Analysts at MUFG said that if BTP (Italian government bond) yields moved notably higher “correlations could well strengthen and this would provide further downside pressure for the euro”.

Investors have been pricing in the possibility that the tussle between Italy and the European Union will force the European Central Bank to be more cautious in removing stimulus. Euro zone money markets are now not fully pricing in an interest rate rise from the ECB until October 2019. Earlier this week, they were projecting an increase next September. [/ECBWATCH]

Stock markets all round were a bit lackluster: data showing China’s economy growing at its slowest pace since 2009 weighed on shares in Asia, although Chinese shares staged a recovery after the securities regulator announced a series of measures to aid the market. MSCI’s broadest index of Asia-Pacific shares outside Japan was up less than 0.l percent after earlier falling as much as 0.9 percent ahead of the China GDP reading. Australian shares fell 0.05 percent and Japan’s Nikkei average ended 0.6 percent lower for its third straight week of declines.

Stocks in Europe managed a modest rise at the start of trading, but fell back into the red. The MSCI All-Country World Index, which tracks shares in 47 countries, was down 0.2 percent on the day. It was set for a fourth weekly loss on the trot, which would make it its longest weekly losing streak since the end of 2015.

In currencies, the dollar index, a gauge of the greenback’s value against major peers, was 0.1 percent higher at 95.981. Meanwhile, the British pound rose after EU negotiator Michel Barnier said a Brexit deal with the United Kingdom was 90 percent done although hurdles remained. [GBP/]

Oil prices ticked higher after falling on Thursday. U.S. crude was up 0.1 percent at $68.68 a barrel and Brent crude was trading at $79.37 per barrel, also 0.1 percent higher. [O/R]

 

Top Five News to Know in The Stock Market Today


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1. U.S. Futures Point to A Triple-Digit Drop

U.S. stock index futures pointed to a sharply lower open, as investors remained in a cautious mood following an abrupt market selloff in the previous trading week. The market shakeout has been blamed on a series of factors, including worries about the impact of a U.S.-China trade war, a spike in U.S. bond yields and caution ahead of the earnings season.

Not helping the mood, Saudi Arabia doubled down on pressure from the West on Sunday over the disappearance of Jamal Khashoggi, a U.S. resident and Washington Post columnist, after he entered the Saudi consulate in Istanbul on Oct. 2. At 5:20AM ET, the blue-chip Dow futures were down 150 points, or about 0.6%, the S&P 500 futures shed 18 points, or around 0.7%, while the tech-heavy Nasdaq 100 futures indicated a decline of 73 points, or roughly 1%.

U.S. stocks finished almost 300 points higher on Friday but still registered steep losses for the week, with the Dow and S&P 500 falling more than 4%, while the Nasdaq posted a decline of 3.7%. Elsewhere, in Europe, the region’s major bourses were broadly lower, with the regional benchmark falling to a 22-month low, as investors watched developments surrounding Brexit talks and Italy’s budget drama.

Earlier, stocks in Asia slipped, with markets in China faring the worst. The mainland’s benchmark Shanghai Composite fell by 1.4% to close at its lowest since November 2014.


2. Bank of America Kicks Off Busy Week of Earnings

A handful of Dow components report in the week ahead, along with dozens of S&P 500 companies, in what will be the first big week of the third-quarter earnings season. Market participants will focus on numbers from Bank of America (NYSE:BAC) slated to be released at 6:45AM ET (1045GMT). Analysts are forecasting earnings per share (EPS) of $0.62 on revenue of $22.62 billion. The same period of last year had $0.48 in EPS and $25.34 billion in revenue.

The first three major banks, JP Morgan Chase (NYSE:JPM), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC), all reported better-than-expected earnings to unofficially kick off the third quarter earnings season on Friday.


3. U.S. Retail Sales in Focus

Monday’s calendar features the biggest economic data point of the week. The Commerce Department will publish data on retail sales for September at 8:30AM ET (1230GMT), which should lend further support to the notion that the economy is on solid footing. The consensus forecast is that the report will show retail sales rose 0.7% last month, after a mere 0.1% increase in August, the smallest rise in six months. Excluding the automobile sector, sales are expected to increase 0.4%.

Also on the economic calendar will be the New York Fed’s Empire State manufacturing reading for the month of October. Investors will pay particular attention to the data for any impact tariffs are having on the sector. The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was a shade lower at 94.80. Meanwhile, in the bond market, U.S. Treasury prices were little changed, with the benchmark 10-year yield at around 3.15%.


4. Oil Prices Rise Amid Saudi Tensions

Oil prices were higher to start the week, as geopolitical tensions over the disappearance of a prominent Saudi journalist stoked supply worries. Benchmark Brent crude oil jumped by $1.43 a barrel to a high of $81.86 before pulling back to $81.05, up 62 cents. U.S. crude was last up 33 cents at $71.67. Saudi Arabia has been under pressure since Khashoggi, a critic of Riyadh, disappeared on Oct. 2 after visiting the Saudi consulate in Istanbul. U.S. President Donald Trump threatened “severe punishment” if it is found that Khashoggi was killed in the consulate.

Investors suspect the latest development could undermine the leadership of Crown Prince Mohammed bin Salman and has the risk of eventually destabilizing the oil-rich kingdom.


5. Sears Files for Chapter 11 Bankruptcy

Sears Holdings filed for bankruptcy early Monday after years of staying afloat through financial maneuvering, and announced that Eddie Lampert will be stepping down as CEO, effective immediately, although he remains its chairman. The 125-year-old retailer said it was appointing Mohsin Meghji, managing partner of M-III Partners, as its Chief Restructuring Officer.

As part of the bankruptcy, Sears will shutter 142 stores towards the end of the year end. It expects to begin liquidation sales shortly. Shares in Illinois-based Sears (NASDAQ:SHLD) closed at about 41 cents on Friday.

Altria Group Inc. (MO) might be keen to buy a stake in marijuana firm Aphria Inc. (APH)



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In a research note, published shortly after Aphria dismissed claims that it had signed a deal with the holding company of Philip Morris USA, Stifel’s Christopher Growe wrote that tobacco companies have been wise to avoid investing in Canadian pot producers.

According to Barron’s, the analyst said that leading marijuana companies are too expensive, trading on an aggregate enterprise value of around $60 billion Canadian dollars, even though their addressable market will be worth just $5 billion Canadian dollars when recreational cannabis becomes legal in Canada Oct. 17. Growe also repeated Philip Morris International Inc.’s (PM) warning about the potential “reputational risk” of entering the marijuana sector. Citron Research reached a different conclusion. In a separate research note, the short-seller wrote there’s a lot to like about tobacco firms operating in the marijuana space.

Altria’s reported interest in Aphria shows the maturation of legacy tobacco, Citron analysts said, adding that such a move would benefit Pyxus International Inc. (PYX), the 145-year-old tobacco supplier that is one of the first in the sector to branch out into pot.

Citron, which has questioned the performance of cannabis stocks Cronos Group Inc. (CRON), India Globalization Capital Inc. (IGC) and Tilray Inc. (TLRY) in recent weeks, described Pyxus as the only U.S.-listed marijuana stock with “material upside.” The North Carolina-based tobacco company’s shares have surged since it first entered the marijuana market in February 2018, despite claims that its Canadian pot subsidiary is relatively small, remotely located and has little access to key markets.

While other analysts short the stock, Citron slapped a $65 price rating on Pyxus, adding that its valuation could double if investors remain on the cannabis bandwagon. In the bullish research note, published on Thursday, Citron analysts praised Pyxus’s hiring of Bryan Mazur, a former executive vice president at Dr Pepper Snapple Group, and commented that the company’s provincial supply agreement and production capacity have been overlooked by the market.

“What we think is interesting about PYX is that the legacy tobacco business is covered by the current valuation and as an investor, you get free upside on a real cannabis business. In the last 12 months, CGC [Canopy Growth Corp], TLRY and CRON have generated slightly over $100 million in combined revenue while PYX alone generated almost $2 billion,” Citron said. “Despite this large discrepancy, PYX only has a market cap of about $350 million while the others each have multibillion-dollar valuations.”

“There are currently four times as many smokers as cannabis users in the world. However – particularly in developed markets – use of cannabis is soaring while tobacco use plummets,” Euromonitor International had said in a 2017 report. “The tobacco industry must secure future revenue streams and legal cannabis offers a legitimate opportunity.” Pyxus shares rose 10.1% in pre-market trading. They also climbed 4.09% during Thursday’s session, a day when most other cannabis stocks saw their valuations slide.

Asia-Pacific equities rose on Thursday after declining in the previous session on the latest development in the US-China trade spat, while oil prices steadied following the biggest one-day tumble in more than two years.

StockMarketNews.Today – Hong Kong’s Hang Seng index nudged higher, rising 0.1 per cent following a 1.3 per cent fall in the previous session after US President Donald Trump began the process of imposing tariffs on a further $200bn of Chinese goods.

The Hang Seng China Enterprises index of major Hong Kong-listed Chinese companies rose 0.4 per cent after a 1.5 per cent fall on Wednesday. Mainland Chinese shares posted better gains with the CSI 300, comprising Shanghai and Shenzhen stocks, up 0.9 per cent.

Concerns over US-China trade remained in focus. Robert Carnell, ING’s chief economist and Asia-Pacific head of research, said the recent pattern of market wobbles on the latest trade war news followed by a recovery could only continue for so long.

“The movements towards protectionism are significant and lasting . . . [and they] will reduce trade volumes and economic gains from trade,” he said. “This really does not merit the occasional small temporary correction, followed by swift recovery. But instead, deeper and prolonged selling.”

Shares in China’s ZTE jumped 21 per cent in Hong Kong after the US commerce department said it had signed an escrow agreement with the telecoms maker as part of a previously announced deal with the Trump administration that would allow it access to the US market.

Japan’s Topix was up 0.3 per cent buoyed by a weaker yen and a 1 per cent gain for consumer non-cyclicals. That gain came despite a 2.6 per cent fall for the energy sector on a slide in oil prices on Wednesday.

In Australia, the S&P/ASX 200 gained 0.6 per cent even as Australian mining and energy stocks took a hit from fall in commodity prices on Wednesday. The energy sector was down 1.4 per cent while basic materials fell 0.3 per cent.

Forex:
The dollar index, a measure of the greenback against a basket of peers, was hovering at a 10-day high after strengthening 0.6 per cent in the previous session. The yield on the 10-year US Treasury was flat at 2.853 per cent. The dollar was 0.2 per cent stronger versus the yen at ¥112.29, its highest in six months.

China’s currency weakened with the onshore renminbi, which trades within a 2 per cent band either side of a daily midpoint set by the country’s central bank, was down 0.4 per cent at Rmb6.7009 while the offshore renminbi was 0.1 per cent stronger at Rmb6.6991.

There was no respite for the Turkish lira, which weakened further to TL4.898, having earlier hit a fresh record low of TL4.9711 as investor angst over the country’s economy intensified. Turkish president Recep Tayyip Erdogan on Wednesday predicted a fall in interest rates.

The pound was 0.1 per cent weaker at $1.3193 while the euro was steady at $1.1674.

Commodities:
In commodities, Brent crude was 1.5 per cent higher at $74.49 a barrel following its biggest one-day decline in more than two years in the previous session. The global crude benchmark tumbled 6.9 per cent to settle at $73.40 a barrel on Wednesday, reflecting widespread weakness in commodity markets on US-China trade tensions. West Texas Intermediate was 0.3 per cent higher at $70.68 a barrel.

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Tiger Global, the $22bn US investment manager, has taken a stake of more than $1bn in SoftBank Group, saying the Japanese conglomerate’s share price is “meaningfully undervalued”

The stakebuilding by one of the original “Tiger Cub” hedge funds is a vote of confidence in Masayoshi Son, SoftBank’s founder, as he works to boost the stock of his conglomerate.

SoftBank, which had a market capitalisation of ¥9.6tn ($86.3bn) at the close of trade on Wednesday, owns 27 per cent of Chinese ecommerce group Alibaba and 43 per cent of Yahoo Japan. It also controls telecoms companies SoftBank Mobile and Sprint, holds stakes in numerous other technology and telecoms companies, and has launched the $100bn Vision Fund to make tech investments around the world.

If the Vision Fund returns two and a half times its original investment over the next seven years, Tiger Global estimated that SoftBank could generate an additional $73bn of value before tax — more than 80 per cent of the company’s current market capitalisation.

Tiger Global also pointed to SoftBank’s plan for an initial public offering of its mobile phone business in Japan. That could be a key moment, say analysts, for the valuation of the company, which many investors have struggled to put a price on. Mr Son promised his own shareholders at SoftBank’s annual meeting last month: “I will make sure that the inside of our wallet becomes easier to calculate so that you can rest at night in peace.”

Tiger Global said it saw “many other opportunities” for SoftBank to boost value for its shareholders beyond the IPO of SoftBank Mobile, including the sale of Sprint to its US telecoms rival T-Mobile, share buybacks and a potential tax-deferred spin-off of the Alibaba stake.

It said: “In our view, the opportunity to buy the shares cheaply exists today because SoftBank’s stock has not appreciated in nearly five years, even though the value of its Alibaba stake has increased by over $90bn, more than SoftBank’s entire market capitalisation.”

Tiger Global was started by portfolio managers who previously worked at Julian Robertson’s Tiger Management, one of the first hedge funds. Its founder, Chase Coleman, and his team manage around $11bn in its hedge fund division and a similar amount in venture capital. The new SoftBank stake is being held in its hedge fund.

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Masayoshi Son seeks to convince world of SoftBank’s true worth
Mr Coleman’s venture capital arm has invested in many of the same companies as SoftBank, including Flipkart, Uber, and Alibaba, and several companies in south-east Asia.

Its hedge fund business, meanwhile, has been one of the best performers in the industry this year. Its main fund was up 15.9 per cent in the first half of the year, while a long-only fund was up 16.7 per cent. HFR’s index of hedge funds across all strategies was up around 0.8 per cent to the end of June.

Oil prices fell after U.S. President Donald Trump threatened to levy new trade tariffs on China.

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The specter of tariffs on a further $200 billion worth of Chinese goods sent commodities lower along with stock markets, as trade tensions between the world’s two biggest economies intensified.

Brent crude futures (LCOc1) were down 65 cents, or 0.8 percent, at $78.21 a barrel by 0627 GMT, having fallen to as low as $77.60. U.S. crude (CLc1) was down 43 cents, or 0.6 percent, at $73.68.

“The trade concerns have bitten today and the reason is that this is above and beyond what the market was expecting,” said Michael McCarthy, chief markets strategist at CMC Markets in Sydney.

“Although there is a long deadline on this, if these tariffs are introduced there will be an impact on global growth and demand,” McCarthy said.

The bearish mood was also fueled by news the United States would consider requests for waivers from sanctions due to snap back into place on Iranian crude exports.

Washington will consider requests from some countries to be exempted from sanctions it will put into effect in November to prevent Iran from exporting oil, U.S. Secretary of State Mike Pompeo said on Tuesday.

Washington had earlier told countries they must halt all imports of Iranian oil from Nov. 4 or face U.S. financial measures, with no exemptions.

The U.S. pulled out of a multinational deal in May to lift sanctions against Iran in return for curbs to its nuclear program.

U.S. crude inventories fell last week by 6.8 million barrels, according to data from industry group, the American Petroleum Institute.

Analysts polled by Reuters forecast that crude stocks fell on average by 4.5 million barrels, ahead of government data at 10:30 a.m. EDT (1430 GMT) on Wednesday.

U.S. crude oil production is expected to average more than 12 million barrels per day late next year for the first time, the U.S. Energy Information Administration said in a monthly report on Tuesday.

Trump ratchets up trade tension.China leads broad sell-off as US prepares tariffs on a further $200bn in imports

StockMarketNews.Today – China-focused stocks led a broad sell-off in Asia-Pacific equities and the renminbi slid after US President Donald Trump kicked off the process of imposing tariffs on a further $200bn of imports from China, escalating the trade war between the world’s two largest economies.

European stocks are set to follow, albeit with narrower losses than the 2 per cent declines seen for mainland Chinese indices. According to opening calls from London Capital, Frankfurt’s Xetra Dax will fall 0.7 per cent, with London’s FTSE 100 set to lose 0.5 per cent.

The fall in equities reflected a broader pattern of an immediate sharp reaction to new developments in the US-China trade dispute before markets priced in the specific implications, said JPMorgan Asset Management strategist Hannah Anderson.

“It is going to take investors some time to price that in . . . we can expect that given the size of what’s been announced that the reaction might be a little more negative than it has in prior episodes of trade-related volatility,” Ms Anderson said.

The market should get itself back on track in “a week or two”, but specific sectors targeted by the new tariffs will continue to get hit, she added.

The White House announced that Mr Trump had told the US trade representative to begin imposing levies of 10 per cent on the products.

Robert Lighthizer, US trade representative, said Mr Trump’s decision followed China’s imposition of tariffs on $34bn of US exports and threats of levies on another $16bn. “It did this without any international legal basis or justification,” Mr Lighthizer said.

Beijing’s move came after the US on Friday first imposed new US duties on $34bn of Chinese imports.

Equities:
The CSI 300 of major Shanghai and Shenzhen stocks dropped 1.9 per cent with all market segments declining.

In Hong Kong, the Hang Seng China Enterprises index of large Chinese companies listed in the territory fell 2.1 per cent, while the broader Hang Seng index shed 1.7 per cent.

Tokyo’s Topix was down 0.9 per cent while in Seoul the Kospi Composite lost 0.4 per cent. In Sydney the S&P/ASX 200 dropped 0.6 per cent.

In the US, where Wall Street had an upbeat session, futures were hit after the bell. S&P 500 futures fell 0.7 per cent, after the main index closed up 0.3 per cent. FTSE index futures were down 0.6 per cent.

Forex:
The Chinese currency was also under pressure. The onshore renminbi — which is subject to a 2 per cent trading band either side of a midpoint — was down 0.5 per cent at Rmb6.6606 per US dollar.

The dollar index was flat. The Japanese yen, typically a haven at times of uncertainty, edged down 0.1 per cent to ¥110.07.

Fixed income:
Sovereign debt markets were largely steady. The yield on US 10-year Treasuries fell 1 basis point to 2.842 per cent, while that on the equivalent Australian note fell 1 bps to 2.617 per cent and the yield on 10-year Japanese government bonds was unchanged.

Commodities:
Oil prices cooled after Mike Pompeo, US secretary of state, said that oil sanctions waivers may be granted to countries seeking relief from tough White House measures against Iran set to start in November.

Brent crude, the international benchmark, was down 0.9 per cent at $78.13 a barrel in Asia-Pacific trading. West Texas Intermediate, the key US price, shed 0.7 per cent to $73.60 a barrel.

Stock Market News: Top 3 Things to Watch

Traders-news

1. Inflation Data, Earnings in the Spotlight

Economic indicators are likely to set the market tone for the open Wednesday.

Wholesale inflation figures should get the most attention.

The headline producer price index (PPI) and the core PPI, which excludes volatile food and energy prices, are expected to show a smaller increase in inflation for June compared with May’s figures.

Economists expect both to have risen by 0.2%.

The latest data on wholesale inventories also arrives before the bell.

Looking to earnings, wholesale industrial and construction supplier Fastenal (NASDAQ:FAST) reports earnings before the bell tomorrow. Shares took a hit when the stock was downgraded to neutral from buy by Baird last Tuesday, but have since rallied as earnings approached.

 

2. Inventories and OPEC Should Call Oil Direction

Among stocks, energy shares will likely be active as investors get the latest oil inventory figures from the Energy Information Administration.

A drawdown in crude oil and gasoline inventories is expected for the week ended July 6. Distillate stockpiles are expected to have risen for the week.

OPEC’s monthly report will also give investors and traders a look at how the cartel is dealing with demands for more supply to keep a lid on prices.

Crude Oil WTI Futures settled up 26 cents to $74.11 on Tuesday.

 

3. Tough Trade Talk to Continue With Trump in Europe?

The prospect of further trade battles will continue to have an impact on the markets, especially as U.S. President Donald Trump travels to Europe.

Trump’s first meeting will be with NATO in Brussels on Wednesday. Along with his calls for European nations to pay more for NATO defense, he may take the opportunity to decry what he sees as unfair trade practices by the European Union.

The president tweeted on Tuesday that the U.S. loses $151 billion on trade with the EU and that the single bloc charges the U.S. big tariffs and enacts trade barriers.

Apple slices into Spotify’s lead in US music market. Iphone maker expected to have more US subscribers by end of the year

applemusic

The rising relevance of Apple Music in the streaming market has been underscored in the past two weeks with the release of Scorpion by Drake, which is expected to be the biggest album of the year. In the first 24 hours of its release, it was streamed on Apple Music 170m times, while Spotify recorded just 130m streams, despite having three times as many total users.

Spotify, Apple and other streaming services do not publicly break down their subscriber counts by country, but they do report the figures to music distributors and record companies.

As of last week, Apple had between 21m and 21.5m US subscribers, while Spotify had 22m to 22.5m, according to industry executives. A year ago, Spotify had about 17m US subscribers to Apple’s 13m, these people say.

Music executives expect Apple to match Spotify in the US by next month. Apple should end the year with about 27m US subscribers to Spotify’s 24m, according to internal forecasts viewed by the FT. Apple’s music service has also been growing faster than Spotify in the UK and Canada, countries that were heavy adopters of the iTunes store, these executives said.

“Spotify has always targeted music lovers, who tend to be a bit younger and were early adopters of streaming,” said Mark Mulligan, analyst at Midia Research. “A lot of that base has been soaked up now, whereas Apple has a much wider customer base. They can get those more mainstream people very easily because [Apple Music] is already in their phone, and they already have their credit card info.”

Globally, Spotify remains the leader in digital music by a wide margin. The company, which also offers a free service, said it had signed up 75m paying customers to the end of March, and expected that to increase to nearly 100m by the end of the year.

Apple most recently reported it had 50m subscribers as of May, although this includes people who signed up for a free trial, inflating the number. Amazon has become a third competitor in the race: the company said in April it had “tens of millions” of subscribers for its music streaming service, but declined to give an exact figure.

Spotify faces greater scrutiny of its subscriber numbers as a public company — investors care about user growth because the $30bn company is still lossmaking.

Daniel Ek, Spotify’s cofounder and chief executive, has brushed off concerns about Apple’s threat. “We don’t see any meaningful impact of competition,” he said on a call with investors in May. “We don’t think that this is a winner takes all market.”

Apple and Spotify declined to comment.

Many banks plan to boost dividends after passing the Federal Reserve’s latest stringent round of stress tests.

Many banks plan to boost dividends after passing the Federal Reserve’s latest stringent round of stress tests, and that could fuel a nice boost to share prices of a select number of U.S. financial firms. The Fed now is allowing many banks to return a greater portion of their earnings to shareholders, which is exactly what they are doing. Banks plan to increase dividends by 25% on average, says JPMorgan Chase & Co. analyst Vivek Juneja. This could push dividend yields to levels that greatly exceed the rest of the financial sector and the broader market, according to MarketWatch.

Nine banks whose planned dividend increases will bring their dividend yields to around 3.00% or higher include Huntington Bancshares Inc. (HBAN)
Huntington Bancshares Inc. – KeyCorp (KEY) – Wells Fargo & Co. (WFC) – BB&T Corp. (BBT) – Regions Financial Corp. (RF) – Fifth Third Bancorp (FITB) – JPMorgan Chase & Co. (JPM) – SunTrust Banks Inc. (STI) and US Bancorp (USB)

Dividend Boost
Although banks have received a stamp of approval following the Fed’s stress tests, the increasing dividends, coming from both big and small banks alike, are a reflection of tax reform benefits and stronger capital ratios due to tepid loan growth, according to Juneja. With greater capital ratios, banks have more room to boost shareholder returns without hitting regulatory lending constraints.

As equity returns depend on both capital gains from stock price returns and on dividend income, a higher dividend yield increases the amount of return that doesn’t depend on stock price performance. Stocks with higher dividend yields represent a relatively cheap way to invest in a stable source of income.

With worries of being in the later stages of the economic cycle, not to mention the threat of trade wars, weighing on the overall market, dividends represent a more stable source of return as most companies try to maintain their payouts even in a recession. As investors turn to more defensive, dividend-paying stocks, this could also help to give these shares an added boost even in the case of a downturn. (To read more, see: US Stocks Face Grim Decade of Low Returns: Morningstar.)

Good Value
The bank stocks underperformance might suggest they are relatively undervalued compared to the rest of the market.

According to a mathematical model built by Bespoke Investment Group macro strategist George Pearkes, which predicts bank stock prices by utilizing two-year Treasury yields and investment-grade bond spreads as model inputs, bank stocks are currently priced 9% below their fair values.

The earnings picture is also looking positive for the financial sector. Next to the energy sector, financials have the best near-term earnings outlook with 21% earnings per share (EPS) growth expected in the second quarter, 40% growth expected for the third quarter, and 28% growth expected for all of 2018, according to a report from Goldman Sachs.

On a more bearish note, Piper Jaffray chief market technician Craig Johnson says the technical outlook for the financial sector is “cloudy,” with the number of financial stocks advancing being outpaced by the number of those declining. As most financials are trading below their 200-day moving averages, it will take a really sustained boost to fuel more positive momentum.

Xiaomi’s weak debut – Xiaomi Corp’s shares fell as much as 6 percent in their Hong Kong debut on concerns over the Chinese smartphone maker’s valuation, in an ominous sign for its technology sector.

Xiaomi priced its IPO at HK$17 per share, the bottom of the range it offered, raising $4.72 billion in the world’s biggest technology float in four years.

Its shares touched a low of HK$16 in early trade and later rallied to briefly touch its IPO price. The stock was at HK$16.88 after the midday break, while the main Hong Kong stock market index was 1.7 percent higher.

Xiaomi’s listing comes as investors fret over escalating trade tensions between the United States and China that have shaken markets over the past several weeks..

Asked if the low pricing of Xiaomi and some other technology firms will weigh on upcoming IPOs, Hong Kong stock exchange CEO Charles Li said at the Xiaomi listing ceremony: “We cannot put a brake. The market is always open. It’s open to everybody…If you don’t like the price, you can stay away.”

VALUATION:
Xiaomi’s IPO valued the firm, which also makes internet-connected home appliances and gadgets, at about $54 billion, almost half the $100 billion it had initially hoped for and below its more recent target of at least $70 billion.

Xiaomi had been expected to raise up to $10 billion, split between its Hong Kong and a mainland offering. But in a surprise move last month, it postponed its mainland share offering.

The HK$17 price valued the company at 39.6 times 2018 earnings, while iPhone maker Apple is trading at 16 times and Chinese social media and gaming giant Tencent Holdings at 36.

“Trading below the issue price suggested that investors still felt the valuation of the stock was relatively high as compared with Tencent and Apple,” said Linus Yip, chief strategist at First Shanghai Securities.

Potential investors also struggled to view the company as the internet play it considers itself to be, rather than as a smartphone maker – the lower-margin business that currently generates most of its profits, sources said.

“We are an internet firm. From day one, we’ve set up a dual-class share structure. Without the innovation of Hong Kong’s capital markets, we wouldn’t get a chance to go public in Hong Kong,” Xiaomi’s founder and chief executive Lei Jun told the listing ceremony at the Hong Kong stock exchange.

Xiaomi sold 2.18 billion shares, making the IPO the largest in the technology sector since Alibaba Group raised $25 billion in New York in 2014.

The float adds to Hong Kong’s $7 billion worth of new listings this year. It is also the first under the city’s new rules permitting dual-class shares, common among U.S. tech firms, in an attempt to attract tech sector floats.

Xiaomi focuses on low-priced, high-performance smartphones and touts an innovative business model that features online services, a range of consumer electronics products built by partner firms, and a retail strategy that includes a network of physical stores.

It is now the biggest smartphone vendor in India and is pushing into European markets including Spain and Russia, though it has lost share in China recently to lower-cost rivals.

Sterling steady after Brexit secretary resigns, FTSE set to rise. Stock markets buoyed by Wall Street gains

StockMarketnewsN01

Leading quote:
“For now, the prime minister’s success in agreeing what looks like one of the softest possible versions of Brexit with the majority of her Cabinet has been cautiously welcomed by the markets, with sterling steady and UK equities called higher this morning, in line with the rest of Europe.” — Ian Williams at Peel Hunt.

Hot topic:
Sterling is trading steadily and London stock markets are expected to rise alongside their European peers as traders attention turns again to the politics of UK’s departure from the EU.

The pound remains higher overall after news of the resignation of David Davis as Brexit secretary, although it is off earlier peaks reached after Theresa May secured agreement from the cabinet from what has been seen as a “soft Brexit” plan. Sterling is up 0.1 per cent at $1.3301 into the start of full European trading, under the $1.3225 touched earlier.

According to opening calls from London Capital, the FTSE 100 will open up 0.5 per cent. The yields on UK government debt is steady, with the 2-year gilt ticking up 1 basis point to 0.751 per cent. That on 10-year debt is flat at 1.268 per cent, leaving both in the middle of recent trading ranges.

Equities:
European bourses are also expected to rise, after Asian stocks picked up the baton from a strong close on Wall Street.

Frankfurt’s Xetra Dax 30 is set to rise 0.5 per cent, with the CAC 40 in Paris set to gain 0.6 per cent.

Hong Kong led Asia-Pacific stocks started higher following Wall Street’s gains on Friday sparked by better than expected US jobs data. The Hang Seng index climbed 1.5 per cent to a one-week high.

Mainland Chinese equities also gained, with the CSI 300 of Shanghai and Shenzhen stocks up 2.1 per cent.

Japan’s Topix index rose 1.1 per cent as technology stocks advanced 1.8 per cent and industrials added 0.9 per cent.

In Australia, the S&P/ASX 200 gained 0.2 per cent as the basic materials sector rose 1.2 per cent. Miner BHP Billiton climbed 2 per cent after Reuters reported that BP was in the lead to buy its US onshore oil and gas assets.

US stocks rallied on Friday after the non-farm payrolls report for June beat forecasts with 213,000 jobs created during the month, providing a distraction from US-China trade tensions. The S&P 500 closed up 0.9 per cent and the Nasdaq gained 1.3 per cent.

Forex:
There is a wider trend for a weaker dollar. The index tracking it is down 0.2 per cent and at its lowest level since mid June.

The euro is up 0.2 per cent at $1.1772 and the yen is unmoved at ¥110.44.

Fixed income:
The yield on 10-year US Treasuries is up 2 basis points to 2.84 per cent, while the yield on 10-year Japanese government bonds is up 1bp at 0.028 per cent.

Commodities:
Brent crude is 0.5 per cent higher at $77.47 while US marker West Texas Intermediate is 0.4 per cent stronger at $74.07 a barrel.

Gold is up 0.6 per cent at $1,261 an ounce.

China is turning to the EU to form a united front against Donald Trump’s trade policies.

 

Before that summit, Chinese premier Li Keqiang is due to meet German Chancellor Angela Merkel in Berlin before returning to Beijing to host the EU delegation. In a summit with central and eastern European leaders in Bulgaria this weekend, Mr Li said China would continue to widen access for foreign investors.

The US imposed tariffs on $34bn in Chinese goods on Friday — a move that China promptly matched with tariffs of its own. President Donald Trump has upped the ante by threatening tariffs on $500bn in trade, equivalent to all the goods the US imports from China, as he attempts to force manufacturing back within America’s borders.

By contrast, China and the EU are expected to exchange market access offers on foreign investment at the summit meeting, after several years in which Europe’s attempts to negotiate a bilateral treaty took a back seat to Beijing’s talks with Washington.

Brussels and Beijing began discussions on an investment treaty in 2013, with frequent complaints from the European side that China was dragging out negotiations and showing no serious willingness to open up its market. The lack of progress even as Chinese investment flooded into Europe was one of the factors behind EU proposals last year for the bloc to equip itself with a more rigorous system for screening foreign investments.

European companies are now being groomed by Beijing as the first beneficiaries of reforms rolled out earlier this year, including steps to reduce or remove ownership caps on security groups and other financial services businesses.

Trade tensions between Washington and its major trading partners are rising, as Mr Trump moves to shield core national manufacturing sectors from what he sees as unfair foreign competition. The EU has already hit €2.8bn of US products with retaliatory tariffs in response to Mr Trump’s restrictions on steel and aluminium imports, and is drawing up an €18bn hit list in response to the US president’s threat to target the auto sector.

But EU officials said that Brussels was determined not to be drawn into any situation that could look like it was teaming up with China against the US on trade policy. They pointed out that European capitals share core Trump administration concerns about the pressure and restrictions Beijing applies to foreign companies, notably when it comes to forced technology transfer, as well as Washington’s anxieties about the activities of Chinese state-owned enterprises.

Negotiators in Brussels underline that they are still far from a deal on the investment treaty, despite recent progress.

Ms Merkel has given public backing to the idea, amid concerns that the US could apply punitive duties against its car exports as early as September. China, for its part, has already lowered tariffs on imported cars, as part of a series of liberalising reforms rolled out as talk of a trade war heated up this spring, before raising them on American cars as part of the recent round of tariffs.

The EU is also pushing for Chinese recognition of the EU’s “Geographical Indications” that protect local specialities such as Roquefort cheese and champagne from imitation.

Tu Xinquan, a trade expert at the University of International Business and Economics in Beijing, said that despite their differences, the EU and China’s shared irritations with Mr Trump should be apparent at the summit and in the coming weeks.

Global markets are bracing themselves as the deadline nears for the US to start imposing tariffs on $34bn of imports from China.

What you need to know:
European bourses make steady start, with some major export stocks rising.
Equities down in Asia as US-China tariffs deadline looms.
Shanghai, Shenzhen and Hong Kong indices continue to decline.
Euro higher, helped by improved German industrial orders data.
Dollar remains shy of 2018 highs.
Oil prices fall after Trump criticises Opec.

Hot topic:
Global markets are bracing themselves as the deadline nears for the US to start imposing tariffs on $34bn of imports from China, in what will mark a significant milestone in the trade dispute between the world’s two largest economies.

China-focused stocks are continuing to take the biggest hit, with wider Asia-Pacific equities broadly lower. European stocks are making a steady start overall, with some major exporters helping Germany’s Xetra Dax 30 outperform its neighbours.

Meanwhile, the onshore exchange rate for China’s renminbi is holding above the nadir touched earlier in the week as worries ease that the trade dispute could reach the currency market. As investors remain on watch for signs that China will allow the renminbi to weaken markedly as part of its response to Washington’s protectionism, the currency is just 0.1 per cent weaker at Rmb6.6365, well away from the extremes of its daily 2 per cent trading band.

Equities:
Frankfurt’s Xetra Dax 30 is up 0.7 per cent, with carmakers in prominent positions on its leaderboard. London’s FTSE 100 is up 0.3 per cent and the Europe-wide Stoxx 600 is flat.

The CSI 300 index of major Shanghai and Shenzhen-listed stocks is down 0.7 per cent, taking its loss for the week to almost 5 per cent. The Shanghai Composite index is weaker by 0.8 per cent for the session and almost 4 per cent for the week.

Hong Kong’s Hang Seng is down 0.9 per cent.

Tokyo’s Topix is down 1 per cent as industrials dropped 1.2 per cent and financials fell 1 per cent. In Seoul the Kospi was off 0.8 per cent.

But Sydney’s S&P/ASX 200 is up 0.5 per cent as telecoms stocks rose 1.4 per cent and financials climbed 0.8 per cent, although mining stocks were down 0.3 per cent.

Forex and fixed income:
The dollar index is down 0.3 per cent on the day, as its wider rally of almost 2.5 per cent for 2018 leaves it looking tired.

The euro is up 0.4 per cent at $1.1703, helped by a stark improvement in German industrial orders for May. The data beat forecasts having been significantly short of expectations in April.

Japan’s yen is 0.1 per cent firmer at ¥110.32 per dollar.

Despite the tension across equities markets, sovereign bond markets were relatively unmoved with yields, which move opposite to price, on 10-year US Treasuries up 1 basis point at 2.84 per cent.

Commodities:
Oil prices are lower after Mr Trump tweeted about Opec on Wednesday, repeating that lower oil prices should be the quid pro quo for the security ties some members of the group enjoy with the US.

Brent crude, the international benchmark, is off 0.6 per cent at $77.81 a barrel, while US marker West Texas Intermediate is down 0.4 per cent at $73.85.

Gold is basically flat at $1,256.14 per ounce.

Asia-Pacific equities were broadly down on Thursday as investors looked towards the looming implementation of tariffs.

What you need to know:
Equities down in Asia as US-China trade war looms
Hang Seng drops 0.3 per cent but CSI 300 up by as much
Oil prices fall after Trump criticises Opec

Top quote:
Global markets are bracing themselves as the deadline nears for the US to start imposing tariffs on $34bn of imports from China, in what will mark the first major shots fired in the trade war between the world’s two largest economies.

Sean Callow, Westpac senior currency strategist, said markets have generally had enough time to price in the tariffs, but “for every investor who is worried about where this trade battle is heading, there is another who points out that this stage of the trade measures is not likely to have a large impact on corporate profits or growth in either the US or China”. However, he continued:

Mr Callow said it was too optimistic to simply brush aside this phase of US-China tariffs, especially considering US president Donald Trump’s June 18 statement threatening further tariffs on up to $400bn of additional China imports.

“We should take this threat very seriously, given Trump’s longstanding views on trade, his protectionist promises on the campaign trail and polling indicating his voter base remains with him into the November midterms,” he said.

The CSI 300 index of major Shanghai and Shenzhen-listed stocks was down 0.6 per cent while the Shanghai Composite index fell 0.9 per cent.

Tokyo’s Topix was down 1 per cent as industrials dropped 1.2 per cent and financials fell 1 per cent. In Seoul the Kospi was off 0.8 per cent.

But Sydney’s S&P/ASX 200 was up 0.5 per cent as telecoms stocks rose 1.4 per cent and financials climbed 0.8 per cent, although mining stocks were down 0.3 per cent.

Forex and fixed income:
The US currency was down slightly in Asia with the dollar index, which tracks the greenback against a basket of peers, falling 0.1 per cent to 94.537. Japan’s yen firmed 0.1 per cent to ¥110.32 per dollar.

The onshore exchange rate for China’s renminbi, which is bound by a trading band of 2 per cent in either direction, was 0.1 per cent weaker at Rmb6.6365, but was still above a nadir touched earlier in the week amid mounting concerns over the US-China trade tension.

“As the US-China trade war rolls on, the threat to Asian trade volumes is likely to be increasingly evident on the Aussie dollar, a proxy for the regional mood and may also see the renminbi being allowed to soften further,” Mr Callow at Westpac noted.

Despite the tumult across equities markets in the region, sovereign bond markets were relatively unmoved with yields, which move opposite to price, on 10-year US Treasuries up 1 basis point at 2.84 per cent.

Commodities:
Oil prices were down on Thursday after Mr Trump tweeted about Opec on Wednesday to repeat a threat that lower oil prices should be the quid pro quo for the security ties some members of the group enjoy with the US.

Brent crude, the international benchmark, was off 0.7 per cent at $77.68 a barrel, while US marker West Texas Intermediate was down 0.3 per cent at $73.82.

Gold was basically flat at $1,255.88 per ounce.

Stock markets showed signs of stabilizing on Tuesday, with European shares and U.S. futures rising following a mixed session in Asia that was dominated by the further declines in the yuan. The euro nudged higher as Germany’s coalition government dodged a crisis over migrants.

StockMarketNews.Today – Stock markets showed signs of stabilizing on Tuesday,

The yuan trimmed some earlier losses as the People’s Bank of China Governor Yi Gang said the country aimed to keep the currency at its equilibrium level. Hong Kong’s stocks tumbled in a catch-up after the city was off on holiday Monday. The dollar fell versus major peers and Treasuries were steady. West Texas intermediate crude climbed for the fifth time in six sessions as a Saudi Arabian production increase failed to move the needle on global supply.

 

While the global trade spat between the worlds biggest economies appears to be worsening — President Donald Trump is taking measures to prevent China Mobile Ltd. from entering the U.S. market — investors will take some cheer from the PBOC’s pledge to keep the yuan stable. They’ll also be looking to minutes from the Federal Reserve and jobs data later in the week to provide a welcome distraction from protectionist risks after the country celebrates its independence day.

These are key events coming up this week:

The U.S. celebrates Independence Day on Wednesday, July 4. Stock and bond markets are closed, along with government offices.

Federal Reserve releases minutes of its June 12-13 meeting, when FOMC policy makers raised the benchmark rate a quarter point for the second time this year and lifted the median forecast to four total increases in 2018.

U.S. payrolls are due Friday.

Also on Friday, the U.S. is scheduled to impose tariffs on $34 billion of Chinese goods.

Beijing has said it will slap tariffs on an equal value on U.S. exports including agricultural and auto exports.

Stocks:
The Stoxx Europe 600 Index increased 0.4 percent as of 8:04 a.m. London time.
Futures on the S&P 500 Index advanced 0.2 percent to the highest in more than a week.
The MSCI All-Country World Index gained 0.1 percent.
The MSCI Emerging Market Index decreased 0.4 percent.

Currencies:
The euro advanced 0.1 percent to $1.1654.
The British pound gained 0.1 percent to $1.3158.
The offshore yuan dipped 0.2 percent to 6.69 per dollar, reaching the weakest in almost 11 months on its 14th straight decline.

Bonds:
The yield on 10-year Treasuries declined less than one basis point to 2.87 percent.
Germany’s 10-year yield gained one basis point to 0.32 percent, the largest gain in a week.
Britain’s 10-year yield advanced two basis points to 1.275 percent, the biggest rise in more than a week.

Commodities:
West Texas Intermediate crude increased 1.1 percent to $74.79 a barrel, the highest in more than three years.
LME copper increased 0.8 percent to $6,576.00 per metric ton, the biggest climb in almost four weeks.
Gold gained 0.1 percent to $1,243.39 an ounce.