^N225 - Nikkei 225
| Previous close | 20,563.16 |
| Open | 20,605.35 |
| Volume | 0 |
| Day's range | 20,582.01 - 20,684.06 |
| 52-week range | 18,948.58 - 24,448.07 |
| Avg. volume | 61,087 |
- Bloomberg
Inverted Yield Curve: Is It Time to Worry Yet?
(Bloomberg) -- Last year, U.S. 10-year yields weren’t low enough to really boost the equity market’s appeal. This summer, the inversion of the yield curve is suddenly triggering worries of a U.S. recession, while bund yields are deep into negative territory as Germany seems heading for an economic downturn. Yet there’s few signs of panic among equity traders.Many in the market agree that a U.S. recession isn’t imminent. UBS strategists see the inverted yield curve more as “a statement on lackluster growth in the rest of the world,” and suggest a slowdown would take some time to materialize.One interesting point they note is that European equities seem to have been more vulnerable than U.S. stocks to the gyration of the U.S. 10-year bond yield over the past six months.The U.S. 10-year yield has only fallen below 1.6% on two previous occasions: mid-2012 and mid-2016. According to Citi strategist Jonathan Stubbs, it has worked well as a buy signal for European equities both times, with the DAX returning 23% on average over the next 12 months, the CAC 24%, and the FTSE 17%. Of course, with Fed cuts, ECB QE and trade concerns, things may be different this time, he says.So, should we be worried? Not yet, according to JPMorgan strategists including Mislav Matejka. Over the past six historical episodes, yield-curve inversion preceded recessions by 17 months on average, while the equity market peaked about 11 months after the inversion, they write. Even if the risk of a downturn next year is increasing, much can happen in the meantime. They still expect equities to make all-time highs into the first half of 2020 and see the current pull-back not lasting beyond early September as the ECB will start quantitative easing and the second Fed rate cut might be bigger than the first.The bounce in the U.S. 10-year yield over the past couple of days may have also provided some relief. Indeed, Bank of America technical analysts note that extreme momentum has pushed the monthly Relative Strength Index (RSI) of the U.S. 10- and 30-year bonds into their fourth and fifth-most overbought level ever. This may signal an imminent “key low” or “pivot low.”And not all is bad about negative yields anyway. The more bond yields move deep into negative territory, the more stocks are seen by many as the only attractive asset. Why buy a bond on which you’re guaranteed to lose money while you can buy stocks with lofty dividend yields of 5% or more?True, if held until maturity, government bond yields don’t look appealing. But on an absolute-return basis, some long-duration securities beat stocks. Notably this year, Austria’s 100-year note has delivered investors as much as an 80% return so far. Granted, the timing must be right and liquidity could be an issue.Finally, let’s not forget about another silver lining. With Germany facing the danger of a recession, the government has signaled it stands ready to inject stimulus if things turn sour. Since the bund curve has turned negative across all maturities, financing those fiscal measures in the long-term is even more appealing.In the meantime, Euro Stoxx 50 futures are trading little changed ahead of the open, while S&P 500 contracts are up 0.2%.SECTORS IN FOCUS TODAY:Watch the dollar after President Trump called for the Federal Reserve to cut rates by at least a full percentage point in order to weaken the U.S. currency. Fed Chairman Powell is expected to signal the potential for another cut on Friday, though some of his colleagues are not convinced.Watch the pound and U.K. stocks after U.K. Prime Minister Boris Johnson reiterated the country will be ready to leave the European Union without a deal by the current deadline at the end of October and is planning a September publicity blitz to prepare the public for a so-called hard Brexit. Meanwhile, the Labour party is gearing up for an election.COMMENT:“The flattening of the yield curve was pretty extreme and not what we would naturally expect with the Fed cutting rates, as news should generally affect near-term pricing more than the pricing of bonds maturing in 2040," Emiel Van Den Heiligenberg, head of asset allocation at LGIM, writes in a note. "We therefore aren’t convinced the current situation is sustainable, as the more the curve flattens, the more vocal some members of the Federal Open Market Committee will be in calling for rapid rate cuts.”NOTES FROM THE SELL SIDE:Peel Hunt initiates Playtech with an add rating, as the broker says that although the company is a “strategic muddle,” there is a will to sort out its issues which are “now exposed to daylight.”Jefferies says the biggest potential Brexit risks to the paper & pulp sector are goods-trade disruptions across U.K.-Europe borders as well as a potential macro slowdown next year in those markets. Mondi is seen as least exposed to U.K., SCA has the most U.K. sales exposure while DS Smith will see biggest FX sensitivity to earnings as a co. reporting in GBP with most profits coming from outside the U.K.European insurers have been surprisingly strong in the past 12 months but falling investment yields turns Bankhaus Lampe more cautious on the sector in a note downgrading its rating on Zurich to sell. Separately, Jefferies upgraded its rating on Zurich to buy.COMPANY NEWS AND M&A:BHP Gives Investors Bonanza Returns And a Trade Spat Warning (1)BHP CEO Says Top Miner Can Still Profit In Any Global DownturnBain, Carlyle Said to Weigh Raising Osram Bid to Counter AMSCasino Identifies New Asset Diposals Worth EU2bBNY Mellon, Societe Generale to Join German Cum-Ex Trial (1)Pandora Second Quarter Revenue 1.3% Above EstimatesBasilea Narrows FY Operating Loss View, Midpoint Wider Than Est.Seadrill Ltd 2Q Adjusted Ebitda Beats Highest Est.South Korea May Fine Audi, Porsche over Alleged Emission-RiggingColoplast Chairman Lars Rasmussen Sells Shares Using OptionsAmbea Second-Quarter Net Sales Beat Highest EstimateAnglo American Pledges $30m for Peru Projects to End ProtestsGreene King Banishes Brexit Blues With Some Help From Hong KongCarige Calls Investor Meeting to Back $1 Billion Rescue PlanTECHNICAL OUTLOOK for Stoxx 600 index:Resistance at 374.5 (61.8% Fibo); ~386 (uptrend); 395.1 (July high)Support at 370.9 (200-DMA); 365.5 (50% Fibo, May low)RSI: 45.5TECHNICAL OUTLOOK for Euro Stoxx 50 index:Resistance at ~3,400 (uptrend) 3,403 (61.8% Fibo); 3,443 (50-DMA)Support at 3,249 (June/August low); 3,301 (200-DMA)RSI: 46.8MAIN RESEARCH AND RATING CHANGES:UPGRADES:Alstria Office upgraded to overweight at JPMorgan; PT 18 EurosAntofagasta upgraded to neutral at Goldman; PT 8.50 PoundsFLSmidth upgraded to overweight at JPMorgan; PT 360 KronerGlencore upgraded to neutral at Goldman; PT 2.20 PoundsHumana upgraded to buy at Handelsbanken; PT 57 KronorZurich Ins. upgraded to buy at Jefferies; PT 380 FrancsDOWNGRADES:Continental cut to hold at Deutsche Bank; PT Set to 120 EurosGreene King cut to equal-weight at Morgan StanleyMetrovacesa downgraded to sell at Goldman; PT 8.12 EurosProximus downgraded to sell at Goldman; PT 21 EurosRentokil downgraded to sector perform at RBC; PT 4.70 PoundsRepsol downgraded to underweight at Barclays; PT 16 EurosZurich Ins. downgraded to sell at Bankhaus LampeINITIATIONS:Addiko rated new buy at Goldman; PT 27 EurosOlvi Oyj rated new buy at SEB Equities; PT 41 EurosPlaytech rated new add at Peel Hunt; PT 4.25 PoundsStobart rated new outperform at MacquarieMARKETS:MSCI Asia Pacific up 1%, Nikkei 225 up 0.5% S&P 500 up 1.2%, Dow up 1%, Nasdaq up 1.4%Euro up 0.05% at $1.1084Dollar Index down 0.01% at 98.34Yen up 0.11% at 106.52Brent up 0.1% at $59.8/bbl, WTI little changed at $56.2/bblLME 3m Copper down 0.1% at $5768/MTGold spot up 0.1% at $1497.4/ozUS 10Yr yield down 2bps at 1.59% ECONOMIC DATA (All times CET):11am: (EC) June Construction Output MoM, prior -0.3%11am: (EC) June Construction Output YoY, prior 2.0%12pm: (UK) Aug. CBI Trends Total Orders, est. -25, prior -3412pm: (UK) Aug. CBI Trends Selling Prices, prior 12To contact the reporters on this story: Michael Msika in London at mmsika4@bloomberg.net;Jan-Patrick Barnert in Frankfurt at jbarnert3@bloomberg.netTo contact the editors responsible for this story: Blaise Robinson at brobinson58@bloomberg.net, Jon MenonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Reuters - UK Focus
LIVE MARKETS-Europe seen taking a breather
- Bloomberg
Stocks Edge Up as Trade, Economic Growth Mulled: Markets Wrap
(Bloomberg) -- Stocks in Europe climbed with U.S. equity futures and shares in Asia as investors digested developments in trade talks and comments from a Federal Reserve official about the strength of the biggest economy. Treasuries rose and a dollar gauge hovered near the year’s high.The Stoxx Europe 600 index edged up, as gains in healthcare shares offset declines in energy companies. Equities ticked lower in Hong Kong and Shanghai and increased elsewhere in Asia. S&P 500 index contracts advanced after the underlying benchmark gained for a third day on Monday as the U.S. commerce secretary said the nation will delay restrictions imposed on some business operations of China’s Huawei Technologies.Treasuries recovered some of their Monday declines after Fed Bank of Boston President Eric Rosengren pushed back against further rate cuts, arguing he’s not convinced that slowing trade and global growth will significantly dent the economy. U.S. President Donald Trump called for the central bank to cut rates by “at least 100 basis points.”The latest headlines on global trade and interest rates may provide some reprieve for investors spooked by tumbling bond yields. The U.S. decision on Huawei was seen as encouraging for the long-awaited trade pact between the world’s two largest economies. Still, the Chinese company said the temporary relief doesn’t change the fact that it’s been treated “unjustly.”Meanwhile, Trump’s top economic adviser, Larry Kudlow, will speak with business leaders this week amid concerns about the rising odds for a recession, the trade war and whipsawing markets. That comes before Fed Chairman Jerome Powell’s remarks about the challenges for monetary policy at the Jackson Hole symposium Friday.“Our thesis maintains that over the next six months equity markets should do better, really mainly underpinned by the lower interest rates around the world,” Jun Bei Liu, a portfolio manager at Tribeca Investment Partners in Sydney, told Bloomberg TV. “Of course, there’s a few issues that arise. One is that the valuations seem incredibly high. And the trade conflict is another uncertainty at this point.”Elsewhere, there was muted reaction after China made borrowing costs cheaper for companies with the introduction of a revamped market benchmark rate. Oil futures were steady.Here are some notable events coming up:Minutes of the Fed’s July meeting will provide details on the discussions leading to the first interest-rate cut in a decade when they are released on Wednesday.Thursday brings the Bank Indonesia rate decision and press conference with Governor Perry Warjiyo.Flash PMIs are due for the euro area on Thursday.Kansas City Federal Reserve Bank hosts its annual central banking symposium in Jackson Hole, Wyoming, starting Thursday. Fed Chairman Jerome Powell will give remarks on Friday.Here are the main moves in markets:StocksFutures on the S&P 500 Index gained 0.2% as of 8:28 a.m. London time.The Stoxx Europe 600 Index advanced 0.2%.The MSCI Asia Pacific Index increased 0.5%.Hong Kong’s Hang Seng Index decreased 0.2%.CurrenciesThe Bloomberg Dollar Spot Index dipped less than 0.05%.The British pound fell 0.3%.The euro was unchanged at $1.1078.The Japanese yen climbed 0.2% to 106.42 per dollar.BondsThe yield on 10-year Treasuries dipped two basis points to 1.58%.Britain’s 10-year yield declined one basis point to 0.463%.Germany’s 10-year yield decreased two basis points to -0.67%.Italy’s 10-year yield advanced one basis point to 1.448%.CommoditiesGold climbed 0.2% to $1,499.46 an ounce.Silver climbed 0.7% to $16.99 per ounce.West Texas Intermediate crude was unchanged at $56.21 a barrel.\--With assistance from Sybilla Gross.To contact the reporters on this story: Andreea Papuc in Sydney at apapuc1@bloomberg.net;Todd White in Madrid at twhite2@bloomberg.netTo contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net, Laura CurtisFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg
Stocks Rally on Trade as Dollar Rises to 2019 High: Markets Wrap
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Stocks climbed after the Trump administration signaled progress on trade negotiations and speculation grew that major central banks will shore up their economies. The dollar rose to this year’s high.The S&P 500 Index gained for a third day, led by chipmakers, as U.S. Commerce Secretary Wilbur Ross said the nation will delay restrictions imposed on some business operations of China’s Huawei Technologies Co. The Treasury market was unfazed by President Donald Trump’s call for the central bank to cut rates by “at least 100 basis points.” Bunds tumbled as Germany was said to be preparing fiscal stimulus measures. Oil rallied as a drone attack in Saudi Arabia highlighted simmering Middle East tension. Gold fell.In corporate news, Walt Disney Co. erased gains and was little changed at the close after a MarketWatch report cited a whistleblower who said the company had materially overstated revenue for years. Baidu Inc. surged in after-hours trading after quarterly revenue beat analysts’ estimates.The week started on a positive note as the news on Huawei was seen as encouraging for the long-awaited trade pact between the world’s two largest economies. Still, the company said the temporary relief doesn’t change the fact that it’s been treated “unjustly.” The announcement of a reprieve followed a tweet from Trump over the weekend indicating the U.S. was “doing very well with China, and talking,” but suggesting he wasn’t ready to sign a deal.“It’s kind of like a drunken walk,” said Paul Nolte, a money manager at Kingsview Asset Management in Chicago. “There’s no rhyme or reason from day to day as to what’s happening with trade, and trade is really what’s driving the markets. And there’s no way to handicap it. There is no glide path, there is no, ‘Here’s what happening.’ It’s a random walk.”Trump’s top economic adviser, Larry Kudlow, will speak with business leaders this week amid concerns about the rising odds for a recession, the trade war and whipsawing markets. Federal Reserve Bank of Boston President Eric Rosengren pushed back against further rate cuts, arguing he’s not convinced that slowing trade and global growth will significantly dent the economy. Investors awaited Fed Chairman Jerome Powell’s remarks about the challenges for monetary policy at the Jackson Hole symposium Friday.Blue-chip U.S. companies are likely to see a surge in demand for their bonds as the rising amount of negative-yielding debt globally forces more overseas investors to seek higher returns in dollar assets, according to Bank of America Corp. “There is a wall of new money being forced into the global corporate bond market,” strategists led by Hans Mikkelsen wrote in an Aug. 16 note.Here are some notable events coming up:Minutes of the Fed’s July meeting will provide details on the discussions leading to the first interest-rate cut in a decade when they are released on Wednesday.Thursday brings the Bank Indonesia rate decision and press conference with Governor Perry Warjiyo.Flash PMIs are due for the euro area on Thursday.Kansas City Federal Reserve Bank hosts its annual central banking symposium in Jackson Hole, Wyoming, starting Thursday. Fed Chairman Jerome Powell will give remarks on Friday.Here are the main moves in markets:StocksThe S&P 500 rose 1.2% to 2,923.65 at 4 p.m. in New York.The Stoxx Europe 600 Index increased 1.1%.The MSCI Asia Pacific Index climbed 0.9%.CurrenciesThe Bloomberg Dollar Spot Index gained 0.3%.The euro decreased 0.1% to $1.1078.The Japanese yen dipped 0.3% to 106.65 per dollar.BondsThe yield on 10-year Treasuries rose five basis points to 1.60%.Germany’s 10-year yield jumped four basis points to -0.65%.Britain’s 10-year yield climbed less than one basis point to 0.47%.CommoditiesWest Texas Intermediate crude increased 2.4% to $56.21 a barrel.Gold for December delivery fell 0.8% to $1,511.60 an ounce; the spot price dropped below $1,500.\--With assistance from Adam Haigh, Todd White and Laura Curtis.To contact the reporters on this story: Rita Nazareth in New York at rnazareth@bloomberg.net;Sarah Ponczek in New York at sponczek2@bloomberg.netTo contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Rita NazarethFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- FX Empire
Stocks Ready to Jump Again, but Is Downtrend Over?
Stocks retraced some of their recent declines on Friday, as investors’ sentiment improved following bouncing off the short-term support level, economic data releases. The S&P; 500 index continues to trade within a consolidation. Is this a bottoming pattern or just a flat correction before another leg down?
- Yahoo Finance UK
Two signs of strain on the global economy just came out from Japan
Japan said that exports slipped for the eighth consecutive month in July while business confidence tanked.
- FX Empire
Asia Pacific Shares Jump Amid Easing Fears of Global Recession
Buyers are responding to a recovery in U.S. Treasury yields, which may be serving as a sign that talk of a U.S. recession may have been overblown.
- Bloomberg
Would ECB Buying Equities Really Be a Good Idea?
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Just when the market is looking for a positive catalyst to revive its rally, the European Central Bank’s Olli Rehn seems to think it’s a good move to float the idea of equity purchases as a means of stimulus. But a number of investors and strategists aren’t too thrilled and warn of the risk of artificially overvalued assets.In an interview with the Wall Street Journal last week, Rehn said that it was better for the ECB to overshoot than undershoot market expectations when it comes to new support measures, and didn’t rule out adding equities to the central bank’s stimulus program.“I hope the ECB won’t start buying stocks,” said Roelof Salomons, chief strategist at Kempen Capital Management. “Buying stocks is great for investors but it won’t move the needle -- it will create a bubble instead. The ECB has already made a mistake with bond purchases."The rationale behind possible stock purchases is to stimulate household consumption and help European companies raise capital at higher prices to finance investment, according to Laurent Douillet, a Bloomberg Intelligence strategist. Yet, simply buying equities won’t push European firms to boost their capex plans, says Kempen’s Salomons. For that to happen, countries like France and Italy need to implement reforms while Germany needs to increase government spending, he says.If the ECB were to start buying stocks, it wouldn’t be the first central bank to engage in such extraordinary measure. The Bank of Japan has been buying exchange-traded funds since 2010 and now dominates the nation’s ETF industry, spurring concerns among money managers about an equity overhang.“I am a bit skeptical,” said Ulrich Urbahn, head of multi-asset strategy and research at Berenberg in Frankfurt. “Equity buying by a central bank has not worked in Japan. And for the euro zone, the wealth effect should be quite limited."At last July’s meeting, ECB policy makers committed to review a swathe of options including interest-rate cuts and renewed quantitative easing. Meanwhile, European equity funds have seen almost non-stop outflows since March 2018, having lost about $87 billion this year alone, according to Bank of America and EPFR Global.While Rehn may be considering launching stock purchases, the majority of the ECB’s governing council would oppose such a move, says Peter Schaffrik, a global macro strategist at RBC Capital Markets. “I am at this stage not even really thinking about the risks of this scenario as I just don’t think this is a realistic option, it’s a red herring."However, it’s important to note that many strategists and investors had also doubted that the ECB would ever start its 2.6 trillion-euro ($2.9 trillion) bond-buying program to stimulate growth.And some support such a move. Rick Rieder, BlackRock’s chief investment officer for global fixed income, said in April that the ECB should consider buying stocks as a form of additional stimulus as debt costs in Europe are much lower and equity is “too expensive.”“It’s a conflict between investors and economists,” says Kempen’s Salomons. “Markets love shorter-term gains even if those come with long-term concerns. You don’t want to be in the ECB’s shoes.”In the meantime, Euro Stoxx 50 futures are up 0.5% ahead of the open, while S&P 500 futures are rising 0.6%.SECTORS IN FOCUS TODAY:Watch German stocks after the government hinted that the country could add about 50 billion euros of spending, putting a number on the possible stimulus for the first time while also indicating nothing was imminent on that front.Watch Italian equities ahead of a confidence vote in the government on Tuesday. The League and Five Star appear to be beyond healing, with the latter moving to distance itself from Deputy Prime Minister and League leader Matteo Salvini.Watch trade-sensitive stocks as the rollercoaster that is keeping up with the state of U.S.-China trade talks begins with a degree of positivity. U.S. President Donald Trump tweeted his team is “doing very well with China, and talking!”COMMENT:“Investors have fled equities in favor of bond and money market funds at a record rate this year,” Bernstein strategists write in a note. “This low level of investor sentiment provides a cushion for the market so we are not bearish despite worsening macro data. At the very least, this makes this August very different from the last Chinese devaluation of August 2015 when investors had been buying in the prior six months.”NOTES FROM THE SELL SIDE:Jefferies says EON’s earnings outlook continues to appear subdued, although these challenges are now better understood by the market. Broker lifts rating to hold from underperform.Citi raises X5 Retail to buy, and sees co. delivering growth in an environment where growth is becoming more rare. Says “conservatively” models 7.6% Ebitda margin this year, up from previous 7.3%.The U.K. buy-to-let market remains in “decent health” and there’s significant upside for the likes of Charter Court, OneSavings Bank and Paragon Banking, Peel Hunt writes in a note boosting price targets on all three firms. Paragon (buy, PT 580p) is top pick, Charter Court kept at buy (PT 400p), OneSavings also buy (PT 470p).Morgan Stanley initiates Colruyt at equal-weight, seeing free cash generation as able to provide some support to the shares even if risk/reward remains skewed toward the downside.COMPANY NEWS AND M&A:DSV Completes Acquisition of Panalpina; Sees DKK2,200M SynergiesDassault Systemes Says Medidata Stockholders Approve PurchaseGrand City Properties 1H FFO Up 7%; Confirms 2019 GuidanceBpost CEO Van Gerven to Leave Co. in Feb.: De StandaardLundin Norway Makes Small Oil Find South of Edvard Grieg: NPDMitie Set to Sell Stake in Gather & Gather in GBP90M Deal: SkyVapiano CEO Everke to Resign From Office Effective Aug. 31TECHNICAL OUTLOOK for Stoxx 600 index:Resistance at 370.8 (200-DMA); 374.5 (61.8% Fibo); ~386 (uptrend); 395.1 (July high)Support at 365.5 (50% Fibo, May low); 356.5 (38.2% Fibo)RSI: 39.2TECHNICAL OUTLOOK for Euro Stoxx 50 index:Resistance at ~3,400 (uptrend) 3,403 (61.8% Fibo); 3,444 (50-DMA)Support at 3,249 (June/August low); 3,300 (200-DMA)RSI: 41.5MAIN RESEARCH AND RATING CHANGES:UPGRADES:CNH Industrial upgraded to overweight at Morgan StanleyEON upgraded to hold at Jefferies; PT 7.80 EurosHumana upgraded to buy at ABG; PT 55 KronorNovozymes raised to neutral at JPMorgan; Price Target 275 KronerRatos upgraded to hold at SEB Equities; PT 18 KronorScout24 Upgraded to Buy at Kepler Cheuvreux; PT 57.50 EurosX5 Retail GDRs upgraded to buy at CitiDOWNGRADES:Paragon GmbH & Co KGaA cut to hold at Bankhaus LampeTechnogym downgraded to hold at BerenbergINITIATIONS:Colruyt rated new equal-weight at Morgan Stanley; PT 43.40 EurosMARKETS:MSCI Asia Pacific up 0.4%, Nikkei 225 up 0.8% S&P 500 up 1.4%, Dow up 1.2%, Nasdaq up 1.7%Euro down 0.01% at $1.1089Dollar Index up 0.08% at 98.22Yen down 0.01% at 106.39Brent up 1.2% at $59.3/bbl, WTI up 1% to $55.4/bblLME 3m Copper up 0.3% at $5763/MTGold spot down 0.5% at $1506/ozUS 10Yr yield up 3bps at 1.58% ECONOMIC DATA (All times CET):10am: (IT) June Current Account Balance, prior 2.6b10am: (EC) June ECB Current Account SA, prior 29.7b11am: (EC) July CPI Core YoY, est. 0.9%, prior 0.9%11am: (EC) July CPI MoM, est. -0.4%, prior 0.2%11am: (EC) July CPI YoY, est. 1.1%, prior 1.3%\--With assistance from Michael Msika.To contact the reporter on this story: Ksenia Galouchko in London at kgalouchko1@bloomberg.netTo contact the editors responsible for this story: Blaise Robinson at brobinson58@bloomberg.net, Jon MenonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Reuters - UK Focus
GLOBAL MARKETS-Asia stocks gain as China rates tweak lifts investor mood
Asian stocks tracked the Wall Street rally on Monday and found an extra tailwind from a move by China's central bank to change the way a key interest rate benchmark is set, seen by analysts as reducing borrowing costs for companies. The People's Bank of China (PBOC) on Saturday unveiled key interest rate reforms to help steer borrowing costs lower for companies and support a slowing economy caught in the grip of a bruising trade war with the United States. Hopes major economies will seek to prop up slowing growth with fresh stimulus have helped ease some of the recessionary fears unleashed in markets last week.
- FX Empire
A Light Day on the Calendar Leaves Geopolitics and Monetary Policy in Focus
It’s “risk-on” in the early part of the Asian session. With economic data on the lighter side, the markets will likely respond further to last week’s stats.
- Reuters - UK Focus
GLOBAL MARKETS-Asia stocks rise as stimulus, policy hopes calm nervous investors
Asian stocks rose on Monday as hopes of more stimulus from central banks around the world and steps being taken by major economies such as Germany and China soothed investors' fears of a sharp global economic slump. Over recent weeks, recession anxiety - triggered by an inversion in the U.S. bond yield curve - has led to a shakeout in financial markets. MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.25%.
- Bloomberg
Stocks Rise, Treasuries Fall on Stimulus Bets: Markets Wrap
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.U.S. stocks rose for a second day as investors got a reprieve from trade posturing and speculation mounted that European officials will bolster stimulus if growth in the region continues to sputter. Treasuries nudged lower, lifting yields from multiyear lows.The S&P 500 jumped more than 1%, notching its 13th straight session with an intraday move of that magnitude as August volatility persisted. The index lost 1% in the five days for a third straight drop. Bulls got ammunition when on a report Germany would engage in deficit spending in the event of a recession. A day earlier, a European Central Bank official said monetary stimulus would be greater than investors anticipated. Germany’s Dax surged and the region’s bonds retreated.In the U.S., chipmakers paced Friday’s advance after Nvidia Corp.’s after quarterly sales and profit beat estimates. Banks also rose as the yield curve steepened, with two-year rates slipping and 10-years turning higher. Deere & Co. rebounded even after cutting guidance, blaming in part the trade war for undermining sales. In Asia, shares in Hong Kong rallied, Chinese stocks edged higher and Korean equities fell.The prospect for strong European stimulus bolstered confidence that the U.S. economy would be spared some of the ill-effects of the slowdown in that region. Investors remained on edge over trade after a week of back-and-forth headlines delivered wild swings in the equity and bond markets. With traders gunning for more rate cuts from the Federal Reserve, chair Jerome Powell may give a hint of his thinking when he speaks Aug. 23 at the annual central bankers retreat in Jackson Hole, Wyoming.“The Fed, in order to keep this expansion going, needs to provide additional accommodation,” Tiffany Wilding, U.S. economist at Pacific Investment Management Co., told Bloomberg TV. “Whether they are able to arrest the downturn -- there is some question around that. Ultimately we think that they will be able to.”Here are the main moves in markets:StocksThe S&P 500 Index gained 1.45% as of 4 p.m. New York time.The Dow Jones Industrial Average rose 1.2%.The Stoxx Europe 600 Index rose 1.2%.The Shanghai Composite Index climbed 0.3%.The MSCI Emerging Market Index increased 0.7%, trimming the week’s loss to 1.1%.CurrenciesThe Bloomberg Dollar Spot Index rose 0.1%, pushing its weekly advance to 0.5%.The euro fell 0.1% to $1.1092.The British pound jumped 0.5% to $1.2146.The onshore yuan dipped 0.1% to 7.04 per dollar.The Japanese yen declined 0.2% to 106.34 per dollar.BondsThe yield on 10-year Treasuries rose two basis points to 1.5454%.The yield on two-year Treasuries fell one basis point to 1.48%.Germany’s 10-year yield rose three one basis points to -0.685%.Britain’s 10-year yield climbed six basis points to 0.466%.CommoditiesWest Texas Intermediate crude rose 0.6% to $54.76 a barrel.Iron ore climbed 0.3% to $86.75 per metric ton.Gold futures decreased 0.6% to $1,522.60 an ounce.\--With assistance from Nancy Moran, Adam Haigh and Yakob Peterseil.To contact the reporters on this story: Jeremy Herron in New York at jherron8@bloomberg.net;Sarah Ponczek in New York at sponczek2@bloomberg.netTo contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, ;Christopher Anstey at canstey@bloomberg.net, Namitha JagadeeshFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- FX Empire
Asia Markets Mixed; Focus Remains on Treasury Yields
Some investors may have been lulled into believing that recession is imminent and guaranteed, but that’s not the case with this inversion indicator. Research shows the stock market could rally for 15 months after the inversion, and recession may not start until 22 months after the first signal is flashed.
- Reuters
SoftBank's Fortress emerges as white knight for hotel chain Unizo with $1.3 billion bid
Japanese hotel chain Unizo Holdings said it received a friendly buyout offer worth up to $1.3 billion from a SoftBank Group investment firm, a deal that will help it fend off a rare hostile takeover bid from travel agency H.I.S. Co. U.S.-based Fortress Investment Group will launch a tender offer from next week for all of Unizo's shares at 4,000 yen apiece ($37.68), the companies said in separate statements, trumping the 3,100 yen that H.I.S. has offered. Unizo has publicly opposed the H.I.S. bid, saying it lacked synergy and undervalued the hotel chain.
- Reuters
Global Markets: Dollar firms, stocks soar on ECB rate cut expectations
U.S. and European stocks surged on Friday on expectations the European Central Bank will cut interest rates but the dollar pared gains against the euro after a report said the German government was prepared to take on new debt to lift the economy. The dollar hit a two-week high against the euro as expectations of ECB stimulus weighed on the single currency and bullish data showing a jump in U.S. homebuilding permits to a seven-month high also helped lift the greenback. Borrowing costs had plumbed new lows throughout the week as investors unnerved by the prospect of European recession piled into safer assets.
- Bloomberg
Stocks Rise, Treasuries Surge in Volatile Day: Markets Wrap
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.U.S. stocks finished the day higher after getting whipsawed throughout the session as Treasury yields plummeted to levels unseen in years amid concerns about the prospect of a global recession.The S&P 500 swung more than 1% from its high to low for a 12th straight day in volume more than a third above its 30-day average before finally ending the day up. Treasuries also suffered whiplash. The 10-year Treasury yield slid below 1.5% for the first time in three years, while the 30-year dropped under 2% for the first time. Trade headlines set investors on edge, though volatility has gripped markets for most of August since Donald Trump escalated his spat with China.Walmart’s strong results and retail sales that topped estimates did give bulls ammunition. But big declines weighed on indexes as Tapestry Inc. tumbled more than 20% on poor sales and General Electric sank more than 10% on accusations of financial fraud. Cisco Systems fell the most in two years after blaming a slowing global economy for a weak outlook.The trade war still hung over markets, with discordant headlines sending risk assets on a wild ride throughout the day. Stocks sold off after China said it would retaliate against fresh tariffs before bouncing back after official comments struck a more conciliatory tone. President Donald Trump added to concern by saying any deal with China must be “on our terms.”“We’re getting a lot of mixed signals on the trade war. There are messages from both the U.S. and China, sometimes they’re tougher messages and sometimes they’re less tough messages. It’s hard to sort out,” said Janet Johnston, portfolio manager at TrimTabs Asset Management.European assets took a jolt when a top official at the European Central Bank said stimulus measures would exceed investor expectations next month, according to a Dow Jones report. The common currency turned lower against the the dollar and stocks erased losses before finishing lower.The morning volatility continued a bout of turmoil sparked two weeks ago when Trump escalated his trade war with China. The uncertainty the rising tensions caused and growing signs of a slowing global economy inverted a key version of the U.S. Treasury yield curve for the first time in 12 years, exacerbating the flight from risk assets.“It’s a tough week with markets as volatile as they are,” said John Roe, the head of multi-asset funds at Legal & General. “Fundamentals are playing a central role but it’s not helped by trade war politics. Markets seemed calmer today after Trump’s more positive tone yesterday, but now China’s upping the rhetoric and it’s becoming a case of he said-Xi said.”Here are the main moves in markets:StocksThe S&P 500 Index rose 0.3% at 4 p.m. New York time.The Dow Jones Industrial Average rose 0.5%.The Nasdaq 100 was little changed.The Stoxx Europe 600 Index dropped 0.3%.The MSCI Asia Pacific Index declined 0.7%.CurrenciesThe Bloomberg Dollar Spot Index was steady.The euro fell 0.2% to $1.1112.The British pound gained 0.4% to $1.2110.The Japanese yen fell 0.1% to 106.00 per dollar.BondsThe yield on 10-year Treasuries decreased seven basis points to 1.51%.The two-year yield fell 10 basis points to 1.48%.Germany’s 10-year yield dipped six basis points to -0.713%.CommoditiesGold futures rose 0.4% at $1,533.20 an ounce.West Texas Intermediate crude declined 1.1% to $54.64 a barrel.\--With assistance from Adam Haigh, Joanna Ossinger, Ksenia Galouchko, Laura Curtis and Jeremy Herron.To contact the reporter on this story: Sarah Ponczek in New York at sponczek2@bloomberg.netTo contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net, Todd White, Randall JensenFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Reuters - UK Focus
GLOBAL MARKETS-Global stocks hurt by China's trade threats, falling bond yields
China's threat to impose counter-measures in retaliation for the latest U.S. tariffs knocked stocks sprawling on Thursday, checking earlier attempt to recover from a rout sparked by fears of a world recession. Wall Street futures erased earlier losses and were trading in positive territory, but the relentless drop in global bond yields raised fears the world economy was hurtling towards recession and weighed on global equities. Expectations the U.S. Federal Reserve and other central banks would respond robustly to the recession warning helped world stocks to steady earlier.
- Reuters - UK Focus
GLOBAL MARKETS-China's trade threats deal fresh blow to world stocks
China's threat to impose counter-measures in retaliation for the latest U.S. tariffs knocked stocks sprawling on Thursday, checking earlier attempt to recover from a rout sparked by fears of a world recession. Wall Street futures signalled another weak open for U.S. stocks, which fell 3% on Wednesday after long-dated bond yields dropped, raising fears the U.S. economy was hurtling towards recession and dragging world stocks with it. Expectations the U.S. Federal Reserve and other central banks would respond robustly to the recession warning helped world stocks to steady earlier.
- Reuters - UK Focus
GLOBAL MARKETS-Stocks steady after rout, pinning hopes on central banks
World shares held at 2-1/2-month lows on Thursday and Wall Street was set for a firmer open as investors bet the U.S. Federal Reserve and other central banks would respond strongly to recession warnings emanating from bond markets. European shares opened higher and futures flagged a 0.5% rise on Wall Street, where all three indexes fell 3% on Wednesday after an inversion of U.S. government bond yields sparked fears that the world's biggest economy would hurtle towards recession, dragging the rest of the globe with it. Yields on 10-year Treasury bonds dropped below shorter two-year rates for the first time in 12 years, when the same the yield curve inversion presaged the 2008 recession.
- Reuters - UK Focus
MORNING BID EUROPE-Corbyn's bid to block no-deal Brexit viewed warily
British opposition leader Jeremy Corbyn has urged lawmakers across the spectrum, including rebels in the ruling Conservative Party, to help block a no-deal Brexit by bringing down Boris Johnson and installing him as leader of a caretaker government. The problem is that others in the assembly are deeply sceptical of Corbyn's motives, given that he is essentially anti-European Union and that his views are too far to the left for many lawmakers to stomach. Jo Swinson, head of the pro-EU Liberal Democrats, swiftly rejected his proposal for a caretaker government.
- Yahoo Finance UK
This key investing metric is freaking out global markets
Investors see the US Treasury yield curve as a barometer for the health of the global economy.
- Bloomberg
Bargain Hunters Drive Up Trading Volume in Japanese Stocks
(Bloomberg) -- A declining equity market isn’t usually taken positively by investors but traders of Japanese stocks see recent strong volumes as a sign of support.Over the past month, trading value rose on each day the Topix index lost more than 1%, except for once on Aug. 5. The benchmark stock gauge recorded a gain of over 1% only once during the same period, and volume fell.“Bargain hunters are coming into the market whenever the Nikkei 225 breaks below the 20,500 mark,” said Makoto Hattori, an executive officer at Marusan Securities Co. in Tokyo. “Levels near 20,100, where the price-to-book ratio becomes 1, is considered rock bottom.”The Topix declined 1% Thursday, pushing its loss to 5.2% for the month so far. The Nikkei 225 dropped 1.2% to close at 20,405.65. The total daily value of transactions on the first section of the Tokyo Stock Exchange has averaged over 2.3 trillion yen ($21.8 billion) in August, up from 1.9 trillion over the previous two months.The pick-up in trading is particularly notable given the Obon festival in Japan this week and the typical summer holiday season in other major markets.The surge in volumes amid sliding stock prices is “symbolic” as it represents a new reality for Japanese equities, according to Hiroshi Matsumoto, head of Japan investment at Pictet Asset Management Ltd. “A lot of retail investors are wanting to buy especially, but only when there’s a dip in prices.”To contact the reporters on this story: Min Jeong Lee in Tokyo at mlee754@bloomberg.net;Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.netTo contact the editors responsible for this story: Lianting Tu at ltu4@bloomberg.net, Kurt Schussler, Naoto HosodaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Reuters - UK Focus
GLOBAL MARKETS-Stocks rattled, oil sinks as bond markets scream recession
TOKYO/SYDNEY, Aug 15 (Reuters) - Asian stocks stumbled and oil prices extended a punishing sell-off on Thursday as investors feared an historic drop in long-term U.S. bond yields could portend a recession globally. Spooked investors stampeded to the safety of sovereign debt and drove yields on 30-year Treasuries to all-time lows at 1.965%. Such an inversion was last seen in 2007 and correctly foretold the great recession that followed a year later.
