Market movers today
This morning, June industrial production data for Germany, Norway, Denmark and France are due.
In Sweden, government budget data for July are due.
Today’s highlight is the US jobs report for July. While consensus is for a (given the circumstances) ‘small increase’ in employment of 1.5 million, the ADP jobs report on Wednesday (although a bad indicator) said employment was more or less unchanged from June.
Selected market news
The US-China tech tensions escalated further overnight after Trump signed two executive orders that prohibit US residents from doing any business with TikTok, WeChat or the owners. The order will begin in 45 days from now. Trump says the apps are a risk to the national economy and security. This is the first time that Trump has targeted WeChat (Tencent). The FT quotes an US official saying that the 45-day window will give Microsoft and other potential buyers time to reach a deal to buy the US arm of TikTok. The Trump administration also issued recommendations that Chinese firms listed in the US must be delisted if US authorities are not provided access to audited accounts.
This is clearly a step-up from Trump in his China tech campaign and it weighed on tech stocks in Hong Kong and mainland China overnight. Tencent, the owner of WeChat, is down 6.7% this morning in Hong Kong and Hang Seng is currently down 2.3%. That said, remember that Chinese tech stocks rallied strongly in July and August. Bytedance, the owner of TikTok, is not listed. US and European equity futures are also in red.
Financial markets continue to focus on the possibility of a new US stimulus package but the negotiations between the White House and the Democrats ended last night without a deal and the risk of a collapse in the talks is growing. White House Chief of Staff Meadows said that there are still significant disagreements about the size of the package including transfers to state and local governments. For now it remains unclear whether the negotiations will resume later today. Democrat Schumer said he is ready to continue the talks.
The negative risk sentiment this morning has supported the US dollar and EUR/USD has dropped to 1.1838 after briefly trading above 1.19 yesterday. Global FI markets also remain supported and it seems that it is only a matter of time before 10Y US treasury yields fall below the psychological important 0.50% level.
