Trade war fears fade, markets rally, and there’s a raft of corporate news this morning. Here are some of the things people in markets are talking about today.
Jaw jaw, not war war
Talks between Treasury Secretary Steven Mnuchin and his Chinese counterpart on formulating a deal to resolve trade tensions between the two nations include a U.S. request for China to lower tariffs on cars and open its market to financial services, according to a person familiar with the matter. With President Donald Trump continuing to grant exemptions from his announced metal tariffs to U.S. allies, and the prospect of a deal with China, investors are dialing back their fears of a global trade war.
The mood music change from Washington yesterday saw the S&P 500 Index post its biggest one-day gain since August 2015. The positive sentiment fed through to global markets with the MSCI Asia Pacific Index advancing 1.4 percent overnight, while Japan’s Topix index closed 2.7 percent higher. In Europe, the Stoxx 600 Index had gained 1.5 percent by 5:45 a.m. Eastern Time, with all industry sectors rising. S&P 500 futures pointed an advance at the open, the 10-year Treasury yield was at 2.850 percent and gold was lower.
GlaxoSmithKline Plc agreed to buy out Novartis AG’s stake in their consumer-health joint venture for $13 billion in a move which gives Glaxo full control of the Theraflu cold medicine and Panadol pain relievers business. Shares in Glaxo rallied 7 percent in London trading, while Novartis gained 2.3 percent in Switzerland. In other European corporate news, the Times of London reported that Deutsche Bank AG is considering candidates to potentially replace Chief Executive Officer John Cryan, citing disagreements over strategy at the top of the lender. Shares in the bank traded as much as 3.5 percent higher following the report.
Yesterday’s expulsion of 60 Russian diplomats considered spies from the U.S. by Donald Trump, coordinated with similar moves in Europe, has left Moscow increasingly isolated on the world stage. Russia has vowed to retaliate with the Kremlin’s spokesman saying it will be “guided by the principle of reciprocity.” Meanwhile, North Korea may be taking steps to become less isolated, with Kim Jong Un visiting Beijing in his first known trip outside the country since taking power in 2011, according to three people with knowledge of the matter.
While it may be a shortened trading week in the U.S., there is no lack of drivers for the market into the end of first quarter. At 9:00 a.m. the latest S&P CoreLogic house price data is published, with U.S. consumer confidence at 10:00 a.m. The U.S. Treasury continues with its record week for issuance with $89 billion of bills at 11:30 a.m. and $35 billion of five-year notes at 1:00 p.m.