By Lorcan Roche Kelly
Markets, as ever, are hungry for good news on trade with stocks dropping yesterday as concerns rose that the U.S. and China are struggling to get an initial deal done. This means investors will be very closely watching President Donald Trump’s speech to the New York Economic Club later today in which he may address the U.S-China relationship. One place where there could be some good news is a likely decision by the administration to delay the imposition of tariffs on European automobiles after manufacturers from the region engaged in an intensive lobbying effort in Washington in which they highlighted plans to switch production to American suppliers.
There were more protests in Hong Kong today, with a police spokesperson telling reporters that the city is being pushed to “the brink of a total breakdown.” Tear gas was again fired in the financial district as demonstrators blocked roads and clashed with the police. The protests are now in their 23rd week, with no end in sight. For investors in the city’s equity market, swings in valuations are becoming more extreme with stocks rising overnight following Monday’s plunge.
There’s bad news for Wall Street bankers hoping a strong third-quarter performance will boost their year-end bonus. Compensation consultant Johnson Associates Inc. said in a report that equity traders could see a drop of as much as 15%, with bonuses for underwriting and fixed-income trading also expected to fall. Only those in investment banking advisory roles and private equity may seen an increase in compensation. The report also warned of continued layoffs in the industry next year.
With investors waiting for the next trade headline, equity markets have been relatively subdued so far today. Overnight the MSCI Asia Pacific Index added 0.4% while Japan’s Topix index closed 0.3% higher. In Europe, the Stoxx 600 Index was 0.2% higher at 5:50 a.m. Eastern Time with the telecom sector getting a boost from a buyback at a French carrier. S&P 500 futures pointed to a small gain at the open, the 10-year Treasury yield was at 1.935% and gold slipped further.
While Trump’s lunchtime speech to the Economic Club of New York is the main event today, there are some other verbal interventions that may be worth watching. Philadelphia Fed President Patrick Harker and Minneapolis Fed President Neel Kashkari both speak later. CBS Corp, DR Horton Inc. and Overstock.com Inc. report results as earnings season slowly winds to a close.