Trump not ready to cut a trade deal, EU and U.K. look to choose new leaders, and Alibaba weighs $20 billion Hong Kong offering. Here are some of the things people in markets are talking about today.
Big in Japan
President Donald Trump was in Japan for the Memorial Day weekend where he attended several events with Prime Minister Shinzo Abe as the Asian nation continues to try to avoid becoming the next White House tariff target. Trump seemed happy not to open a new front in the trade war, instead concentrating on keeping the pressure on China by saying the U.S. is “not ready” to make a deal and that tariffs could go up “very, very substantially, very easily.” The other potential target of trade measures, the European Union, has rejected a U.S. suggestion that a quota be placed on car exports to America.
The race to be next leader of the U.K. Conservative Party is widening as more candidates throw their hats into the ring. The party’s dismal performance in the European elections may force the next leader to take a harder stance on Brexit, while opposition Labour Party leader Jeremy Corbyn was forced to promise a referendum after Labour also lost seats. In the rest of the European Union horse trading has begun in earnest over the division of the top jobs following the election, with leaders meeting this evening to discuss the next European Commission and European Central Bank president.
Alibaba Group Holding Ltd. is considering raising $20 billion via a second listing in Hong Kong, according to people familiar with the matter. Amid trade tensions and associated political risks, the move certainly seems to make sense for the company. For Hong Kong, getting the listing is a coup, but there are risks associated with such a large float, as some economists warn the demand for liquidity will push local currency interest rates higher.
Overnight the MSCI Asia Pacific Index climbed 0.3% while Japan’s Topix index closed 0.3% higher with electronics firms and carmakers leading the gains. In Europe, the Stoxx 600 Index was 0.3% lower at 5:50 a.m. Eastern Time with banks leading the losses. S&P 500 futures pointed to a slight decline at the open, the 10-year Treasury yield dropped to 2.287%, the lowest in 19 months, and gold was down.
Coming up…U.S. Case-Shiller home price data for March is due at 9:00 a.m., with May consumer confidence at 10:00 a.m. and Dallas Fed manufacturing at 10:30 a.m. The Treasury is selling 2- and 5-year notes today. It might be worth keeping an eye on U.S. weather reports as the severe rain and storms that have hampered U.S. crop production seem set to continue, with corn now trading near a three-year high.