Feb 26, 2019, by Lorcan Roche Kelly
Attack, resignation and election
Tensions between nuclear neighbors India and Pakistan are coming to the boil after India launched an air-strike on what it says was a terrorist training camp inside Pakistan. A government official in New Dehli said that more than 300 people were killed in the attack, while authorities in Islamabad sought to downplay the severity of the strike. Further west, Iranian Foreign Minister Javad Zarif, who led his country’s nuclear negotiations, announced his resignation saying in a posting on Instagram he was no longer able to continue to serve. Analysts say the move could point to hard-liners within the regime gaining the upper hand following the U.S. reimposition of sanctions. Finally, in Nigeria, the results of the weekend’s elections are still coming in, with the main opposition People’s Democratic Party already threatening to challenge the results, saying some counts have been manipulated.
Trump in Vietnam
President Donald Trump arrives in Vietnam today for his hastily organized summit with North Korean leader Kim Jong Un. The White House has set low ambitions for the talks, with the two sides yet to agree on the meaning of denuclearization, or even the ultimate purpose of the negotiations. Meanwhile, back home, the president’s former lawyer Michael Cohen is due to appear before Congress in a closed door session today, with public testimony tomorrow. Also today, the House is due to vote on whether to block Trump’s emergency powers declaration that he issued in an an attempt to get his border wall funded.
British Prime Minister Theresa May might try to delay the March 29 Brexit date today as she comes under increasing pressure to ensure the U.K. does not leave the European Union without a deal. She is expected to make an announcement in Parliament later following a meeting of her cabinet this morning. The pound is rallying as the chances of Britain crashing out of the union are seen to be fading, with sterling trading over $1.3200 and hitting its highest level against the euro since May 2017.
Overnight, the MSCI Asia Pacific Index slipped 0.4 percent while Japan’s Topix index closed down 0.2 percent as the yen strengthened slightly against the dollar, weighing on bank and tech shares. In Europe, the Stoxx 600 Index was 0.1 percent lower at 5:45 a.m. Eastern Time with automakers among the biggest losers while the rising pound put pressure on U.K. stocks. S&P 500 futures pointed to a loss at the open, the 10-year Treasury yield was at 2.664 percent and gold was down slightly.
Federal Reserve Chairman Jerome Powell is due to begin his semi-annual testimony to Congress this morning as divisions emerge among monetary policymakers over when to start raising rates again. He is also likely to be questioned on the recent streak of weaker-than-expected U.S. economic data, plus the Fed’s plans on running down its balance sheet. There may be some signals on how the U.S. consumer is doing when Home Depot Inc. and Macy’s Inc. report earnings. Investors will also be watching the performance of Tesla Inc. shares today after the Securities and Exchange Commission on Monday asked a judge to hold Elon Musk in contempt for a recent tweet that said the company would make about half a million cars in 2019.