Bloomberg Report: 5 Things to Start Your Day August 8th
Good morning. Fears over a global economic growth slowdown are worsening by the day, Saudi Arabia is trying to stem a decline in oil prices, China’s exports are proving resilient, Asian stocks are rising again, and, you guessed it, it’s still earnings season. Here’s what’s moving markets.
Recession Fears Worsen
Fears of a recession are growing worldwide. The latest trigger was German industrial production, which in June registered its biggest annual decline in almost a decade, resulting in the country’s flattest yield curve since the financial crisis as havens are sought. But it’s Asia Pacific countries that are taking the lead on counter-measures against the slowdown, with three very different central banks in the region delivering surprise interest-rate decisions on Wednesday.
Saudi Phone Calls
Saudi Arabia has phoned other oil producers to discuss possible policy responses as oil prices slide to a seven-month low, an official told Bloomberg, adding that the kingdom won’t tolerate a continued decline in prices and is considering all options. It comes after Brent crude futures sank almost 5% on Wednesday following a surprise increase in U.S. stockpiles and amid concern over how the U.S.-China trade war could affect demand. Oil futures recovered somewhat overnight.
China’s export growth rebounded in July and imports shrank less than forecast, signaling some recovery in trade just as companies brace for the arrival of new tariffs from the U.S. There was also an uptick overnight in the yuan – now the focal point of the tariff saga – soothing some nerves. China’s not the problem, according to Trump, who’s once again been berating the Federal Reserve on Twitter. That said, the White House is still rushing to finalize its latest round of tariffs.
The MSCI Asia Pacific Index climbed for a second day, with South Korean stocks outperforming amid signs of easing tensions with Japan. European equity futures were higher along with contracts on the S&P 500 Index, as the latest yuan update helped risk sentiment. At times of uncertainty, there’s no better asset to track than gold. Already at a six-year high after breaking above $1,500, Goldman Sachs Group Inc. says it could rise another 100 bucks over the next six months as investors seek havens.
Thursday is always the busiest day of an earnings week. Life-sciences company Merck KGaA’s second-quarter profit beat estimates, while industrial conglomerate Thyssenkrupp AG cut its outlook for the year as Germany’s slowdown pushes it deeper into crisis. Still to come are sports-gear giant Adidas AG and investment services firm Hargreaves Lansdown Plc, whose top executives are to forgo bonuses in the wake of the Woodford fallout. Uber Technologies Inc. reports after the U.S. close, following rival Lyft Inc., which boosted its annual sales forecast last night.
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