Aug 2, 2018, by Lorcan Roche Kelly
Markets in Asia plunged overnight, wiping more than $220 billion off the region’s stocks as a fresh round of trade war fears sent investors seeking cover. The move came after the White House confirmed that President Donald Trump asked U.S. Trade Representative Robert Lighthizer to consider hiking duties to 25 percent as early as next month. Turkey, meanwhile, is seeing its currency fall to a record low, stocks drop and bond yields rise after the U.S., a NATO ally, imposed unprecedented sanctions over the continued detention of a pastor.
With less than eight months to go to Brexit, the Bank of England is expected to raise rates 0.25 percent to 0.75 percent at 7:00 a.m. Eastern Time this morning. The rate announcement will be followed 30 minutes later by a press conference where Governor Mark Carney will explain the logic behind the decision. The bank will also publish its inflation report at 7:00 a.m., including new forecasts for price growth. Yesterday, the Federal Reserve held rates unchanged, saying risks to its outlook are “roughly balanced.”
Shares in Tesla Inc. jumped more than 7 percent in pre-market trading after the company announced results which showed a smaller cash burn than analysts had forecast. In the call following the release, CEO Elon Musk apologized to two analysts he’d scorned three months earlier for asking “bonehead” questions. Challenges remain, with profits elusive, questions over its bet on China and quality issues with its cars.
Overnight the MSCI Asia Pacific Index slid 1.3 percent while Japan’s Topix index closed 1 percent lower as trade fears again rattled equities in the region. In Europe the Stoxx 600 Index was 0.9 percent lower at 5:45 a.m. as mining and auto shares were hit hardest, with Germany’s DAX Index the region’s biggest loser. S&P 500 futures are pointing to a drop at the open, the U.S. 10-year yield was at 2.986 percent and gold was flat.
There’s one last look at the health of the U.S. labor markets ahead of tomorrow’s payrolls numbers when weekly jobless claims data is published at 8:30 a.m., with expectations for 220,000 new claimants. At 10:00 a.m. durable goods and factory orders numbers for June are released. In earnings today, DowDuPont Inc., Bombardier Inc., MSCI Inc., and Kellogg Co. are among those reporting.