Trump looks to extend China blacklist, Theresa May’s days as Prime Minister seem to be numbered, and Fed minutes due. Here are some of the things people in markets are talking about today.
More tech bans
The White House is considering adding five Chinese companies involved in the manufacture of surveillance equipment to the blacklist that bars them from using U.S. components or software. Shares of Hangzhou Hikvision Digital Technology Co. and Zhejiang Dahua Technology Co. plunged in Shenzhen after reports of the potential move were published. The Trump administration had held off targeting Chinese tech companies while trade talks were ongoing. But after the most recent round hit an impasse, the decision was made to proceed with move against Huawei Technologies Co., with this latest development adding to fears of a tech cold war.
May’s May mayday
The position of British Prime Minister Theresa May is looking increasingly precarious after her latest gambit to get her Brexit deal through Parliament seems to be dead on arrival. While her proposal in a speech yesterday aimed to win sufficient support from MPs, it seems to have had the opposite effect — losing her lawmakers who had previously backed the deal. The pound, which rallied briefly yesterday ahead of the speech, has fallen back below $1.2700 this morning, and is in the throes of its longest-ever losing streak against the euro.
Federal Reserve Bank of St. Louis President James Bullard said the Federal Reserve may have “slightly overdone it” when the bank raised interest rates in December during an interview with Bloomberg News, adding that it is premature to talk about a rate cut. Of course, investors will be looking out for any mention of monetary loosening in the minutes of the April 30-May 1 FOMC meeting, published at 2:00 p.m. today. Discussion on the future composition of the bank’s balance sheet would naturally be of interest to the bond market given projections of large-scale Treasury purchases.
Overnight, the MSCI Asia Pacific Index climbed 0.1% while Japan’s Topix index closed 0.3% lower as reports of the planned U.S. moves against China tech companies soured sentiment. In Europe, the Stoxx 600 Index was 0.1% higher at 5:45 a.m. Eastern Time as financial services and chemicals advanced. S&P 500 futures pointed to little change at the open, the 10-year Treasury yield was at 2.430% and gold was slightly lower.
Traditional retailers continue to suffer, with shares hit by dismal results from Nordstrom Inc., J.C. Penney Co. and Kohl’s Corp. yesterday. Lowe’s Cos Inc., Target Corp., L Brands Inc. and VF Corp are due to report. Also today, Treasury Secretary Steven Mnuchin will testify before the House Financial Services Committee where he is set to renew his battle with Representative Maxine Waters as Democrats ratchet up pressure to turn over President Donald Trump’s tax returns.