US stocks down – manufacturing data and trade tariffs

The US equity markets were clearly down in New York on Wednesday. The global growth concerns related to recent manufacturing and car sales data were the primary reasons. Dow Jones lost 1,86 % to 26078 points, the S&P 500 -index 1,79 % to 2887 points and the technology Nasdaq-index declined 1,56 % to 7785 points.

The US manufacturing data showed the global growth concern is having impact on the US economy. The US China trade talks have put pressures on the US manufacturing and for example the Ford Motor Company released its car sales figures, which were showing a decline in the third quarter.  Also the declining figures in German manufacturing is one part of the global concern.

Tesla (TSLA) also announced its third quarter deliveries, which were approximately 97,000 vehicles, according to the company release. According to Tesla the total deliveries were at record level, but according to Reuters the deliveries were down to Wall Street expectations and the share fell over 6 % after the bell. Last week the CEO Elon Musk was quoting that the company may reach a six-figures deliveries.

The US also announced a new trade tariffs to the EU related to the WTO Airbus decision. The new tariffs would include 7,5 billion dollars worth of goods. According to Bloomberg this would mean a new 10 % tariffs to aircraft goods and 25 % tariffs on farming and other industrial items. The new tariffs would be effective by October the 18th.

In the UK the FTSE -index also declined 3,23 % to 7122 points. The UK Prime Minister Boris Johnson delivered the new Brexit proposal to the EU. The country is aiming the EU leaders summit on the October 17th in order to seek the deal with the EU.

In Germany the DAX-index closed down 2,76  % to 11925 points and in France the CAC 40-index declined 3,12 % to 5422 points.

 

 

 

 

Business Finance

Brexit: New proposal to EU this week

The UK Government will send a new Brexit proposal to the EU during this week. The aim is to target the EU leaders meeting on October 17th in order to have the deal before the deadline.

The main question is still the Irish border issue and the island itself. There have been several leakages from the proposal but according to EU spokesman so far the EU has not seen a document that would bring new proposal to the Irish question.

The financial markets were down in Europe. The FTSE 100-index was down 0,65 % to 7360 points in London and the German Dax-index was down 0,97 % to 12 307 points. In France the CAC 40 -index was down 0,99 % to 5621 points.

The US dollar was trading at 0,818 pounds and at 0,918 euros.

Business Finance

Fed to cut rates due to global growth

The US Federal Reserve FED has cut the short-term overnight rates to a range of 1,75 % to 2 % in its meeting today. The Federal Open Market Committee was not united about the decision, but voted  7- 3 to lower the rates. According to the Fed, the global growth concern and the US China trade talks were the main reasons for the uncertainties in the economic outlook.

– Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the Committee decided to lower the target range for the federal funds rate to 1-3/4 to 2 percent. This action supports the Committee’s view that sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective are the most likely outcomes, but uncertainties about this outlook remain, the Fed said in its press release.

During the last few days, there has been a financial liquidity shortage in the repo-markets and the Fed has been in the markets to add the liquidity. According to Reuters, the central bank has added 125 billion dollars to the financial system during the couple of days.

One of the reasons why the liquidity was happening in the short-term, is the popular swapping. According to market participants, banks and investors are swapping different maturities in the interest rates markets and using the short-term repo-rates to fund the trades.

The Fed also published its economic outlook update and according to it, the inflation is expected to be 1,5 % during this year and 1,9 % in 2020. The GDP is expected to be 2,2% this year and 2,0% next year.

Business Finance

Hong Kong to make rival offer of London Stock Exchange – FT (updated)

The Hong Kong Stock Exchange is making a rival offer of London Stock Exchange, LSE. According to Financial Times, the deal would be worth of 32 billion pounds.

According to the Hong Kong Exchanges & Clearing Ltd CEO Charles Li they considered the offer for months. He says that the combination would be rationale for many reasons and one of them is the assets trading in euros, dollars and renminbi.

– First, LSEG is one of the most well-known, highly respected and successful exchange groups in the world. Based in London, it is a global offshore centre for Eurodollars. Likewise, HKEX is one of the top Asian exchange groups based in Hong Kong, the world’s leading offshore market for Renminbi. A combination of two markets of this size and significance has never been done before and would create a globally-connected exchange group that serves as the leading international platform for financial assets denominated in US dollars, Euro and Renminbi, the CEO Li says in his blog today.

The HKEX has offered 20,45 pounds a share in cash and 2,495 new HKEX shares, which would make a 23 % premium to LSE´s closing price yesterday, the Financial Times says. The shares of LSE are trading up about 8 % to 7368 pounds in London.

 

Business Finance Tech

US to tighten terror sanctions in the financial markets

The US is tightening terror sanctions in the financial markets. According to the Treasury Secretary Steven Mnuchin and the Secretary of State Mike Pompeo, the Trump Administration is tightening terror sanctions in the financial markets.

– The US is continuing to protect the US and the people from terrorist attacks. The Government has taken new actions related to terrorist organizations, regarding individuals and entities, in the financial markets, the Treasury Secretary Steven Mnuchin said today in the White House press conference.

The press conference was arranged due to the changes in the White House national security. According to the tweet by President Donald Trump he will name the new National Security Advisor next week while John Bolton resigned today.

 

 

 

 

Business Finance Tech

Trump: New taxes with China trade

The US President Donald Trump is to impose a new 10 % tariff in China imports. The new taxes, would be imposed beginning September 1st and would include for example smart-phones, laptop computer and children’s clothing.

According to Bloomberg, they will come on top of the 25% duty in place already on some $250 billion in Chinese goods and mean that almost all trade with China will be subject to new taxes.

The US President Donald Trump and the Chinese President Xi Jinping, met last time in Osaka at the end of June. The coming G7 meeting in France, in Biarritz, at the end of August, the 24 to 26 August, might also provide a possibility to continue the locked trade talks.

The Financial markets tumbled to the new tariffs news in Wall Street yesterday and in Asia today. For example the Nikkei-index was trading over 2 % lower and Shanghai-index over 1,7 % lower.

 

 

Business Finance

Stocks closed down in NY- US data and trade tariffs

The US equities closed down today due to weak consumer confidence data and the trade tariffs between the US and China. The US and China leaders are meeting this week in G20 meeting in Japan and the information from the Federal Reserve has been that the tariffs can increase the risk of slower growth globally if there is no more confidence in the markets.

Dow Jones closed down 0,67 % to 26 549 points, S&P 500 index down 0,95 % to 2917 points and Nasdaq down 1,51 % to 7884 points. In Europe the FTSE 100 -index closed up 0,08 % to 7422 points, while the equities on the continent were down. In Germany the DAX closed down 0,38 % to 12 228 points and in France the CAC 40 down 0,13 points to 5514 points.

The US consumer confidence and new home sales were both below markets expectations. On the other hand on the M&A side, the deal volumes and values have been record high, according to Bloomberg data. On Tuesday, AbbVie said it would buy Allergan company, the Botox maker, for 63 billion dollars.

The G20 meeting on Friday and Saturday in Osaka, Japan will give more information while the US President Donald Trump and the Chinese President Xi Jinping will have their discussions then. According to Bloomberg, the US officials have signalled that the trade deal is unlikely to happen.

The US markets have been pricing a 50 basis points rate cut for the next Federal Reserve meeting in July, but according to St.Lous Fed President James Bullard such a rate cut would be too much. He commented the situation in a Bloomberg interview.

The central bankers have been discussing about the cryptocurrencies and Facebook´s new Libra coin in the central banks meeting in Switzerland today. The question of financial stability, consumer and regulatory standpoint are the major issues for the tech company and some believe Libra is not going to be a Bitcoin.

According to Reuters, the Facebook other issues related to privacy concerns and hate speeches have been the major topics and central bankers are requiring more information from Facebook in order to proceed with the new currency. The Britain’s Financial Conduct Authority (FCA) also commented the issue today with the same tone of voice.

In London, the discussions about the Brexit deal and the new Prime Minister have continued. Boris Johnson or Jeremy Hunt will be the next Prime Minister for the UK and the new leader will be announced on the 23rd of July. The deadline, October 31st will be soon, while the UK Parliament is starting their summer holidays on July 25 and the MPs will return on the September 3rd.

The euro was trading slightly up 0,01 % to 1,1368 dollars and the sterling up 0,06 % to 1,2696 dollars.

In Asia, the stocks were also down, the Shanghai All ended down 0,87 % to 2982 points, the Hang Seng in Hong Kong down 1,15 % to 28185 points and the Nikkei-index in Japan down 0,43 % to 21 193 points.

 

 

 

 

 

 

Business Finance