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June 28, 2018, by Lorcan Roche Kelly
(Bloomberg)
Summit
European Union leaders gather in Brussels for a two-day meeting as the bloc faces a range of challenges from immigration to trans-Atlantic tensions to Brexit. With German Chancellor Angela Merkel beset by growing domestic political pressure to forge EU agreement over border controls, that item is likely to dominate the agenda, putting Brexit negotiations on something of a backburner. British Prime Minister Theresa May is likely to hear more warnings from her European colleagues over the trickle of details on how the nation will exit the bloc, with only nine months left.
Date
The time and location of the summit between President Donald Trump and Russia leader Vladimir Putin is due to be announced later today. U.S. National Security Adviser John Bolton played down expectations for concrete outcomes from the meeting at a press conference in Moscow. Vice President Mike Pence said he expects the leaders to discuss Russian meddling in U.S. elections, with Ukraine and Syria also likely to be on the agenda.
Contagion
Emerging-market currencies’ bad run continues, with India’s rupee falling to an all-time low against the dollar this morning. The latest setback for the asset class has upended China’s yuan, which has long enjoyed haven status among developing nations. The currency is now at its lowest level since November. MSCI’s index of EM foreign exchange is heading for its worst month since August 2015.
Markets slip
Overnight, the MSCI Asia Pacific Index fell 0.4 percent, while Japan’s Topix index closed 0.3 percent lower after weak domestic data added to continuing trade concerns. In Europe, the Stoxx 600 Index was 0.4 percent lower at 5:50 a.m. Eastern Time as, again, weak domestic data added to trade concerns. S&P 500 futures pointed to a gain at the open, the 10-year Treasury yield traded flat, at 2.831 percent.
Stress test
At 4:30 p.m. today, the Federal Reserve will posts results from the second and final stage of its 2018 stress test. With U.S. banks coming off their longest losing streak on record, investors will be keeping a close eye on how much the major institutions will be able to pay out in dividends. In the case of Deutsche Bank AG, they will just be hoping that it can pass all parts of the test. In other economic news, today at 8:30 a.m. sees the release of weekly jobless claims and the third reading of first-quarter GDP for the U.S.
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