June 29, 2018, by Lorcan Roche Kelly
More than 20 banks announced how they would reward shareholders following yesterday’s release of the Federal Reserve stress test. JPMorgan Chase & Co., Bank of America Corp., Wells Fargo & Co. and Citigroup Inc., the four biggest lenders in the U.S., said they would increase payouts by distributing more than $110 billion through dividends and buybacks, with Goldman Sachs Group Inc. and Morgan Stanley blocked from boosting money to shareholders. Deutsche Bank AG failed the exam after the Fed found fault with the bank’s internal controls.
Talks at the summit in Brussels over the thorny issue of immigration produced a package of measures to stem the flow of migrants to the European Union and to share the burden of handling those who arrive. The leaders of the bloc’s member states also plan to boost defense cooperation, amid increasing doubts over President Donald Trump’s commitment to the continent’s security. The talks, which went on until 4:30 a.m. local time, also resulted in a fresh warning that any increase in U.S. tariffs on car imports would be met with an unwavering EU response. Today’s negotiations are set to look at the state of Brexit planning.
Are we there yet?
Euro-area inflation hit 2 percent in June, effectively reaching the European Central Bank’s target level for the first time in a year. In a warning sign as to whether the rise is a sustainable adjustment or not, core inflation – which excludes volatile food and energy prices – slipped to 1 percent for the month. At 8:30 a.m. Eastern Time, personal income and spending data for the U.S. are released, with the Fed’s preferred inflation measures, headline and core PCE published at the same time. The latter is expected to come in at 1.9 percent, just shy of the Fed’s target.
Overnight, the MSCI Asia Pacific Index rose 0.9 percent, while Japan’s Topix index closed 0.2 percent higher as the yen weakened. China’s Shanghai Composite Index rallied 2.2 percent as the recent selloff ended. In Europe, the Stoxx 600 Index was 1.0 percent higher at 5:50 a.m. as the immigration deal reached at the EU summit reduced political risk in the region. S&P 500 futures pointed to a gain at the open, the 10-year Treasury yield was at 2.853 percent and gold was higher.
Investigators in Germany are looking at the roles dozens of banks, brokerages, accounting companies, and law firms in a tax-evasion probe involving tens of billions of euros of losses to the Germany treasury. The long-running investigation into a dividend-stripping practice may cost German banks as much as 1.9 billion euros ($2.4 billion). Transactions handled by lenders including Barclays, Goldman Sachs Group, Bank of America Corp., Macquarie, and BNP Paribas SA are also being looked into, with initial indictments expected as early as this year, according to people familiar with the matter.