Welcome to your morning markets update, delivered every weekday before the European open.
Good morning. European stocks are set for another lower open, U.S.-German relations took a turn for the worse, U.K. prime minister candidates start being whittled down today, European countries are making the most of low bond yields and there was a rare bit of good news for the U.K. housing sector. Here’s what’s moving markets.
Trump vs. Merkel
In a further sign of deterioration in U.S.-Germany relations, President Donald Trump upped his criticism of Berlin’s support for a new natural-gas pipeline into Europe from Russia, saying he’s looking at sanctions to block the Nord Stream 2 project that would leave Germany “captive” to Moscow. (The U.S. also wants to sell gas to Germany.) Trump has also repeatedly rebuked Merkel’s government over other policies, like trade and and defense, while Germany has criticized Trump’s moves to abandon agreements on climate change and Iran.
17 or Out
This summer’s second-most-exciting popularity contest really gets going today as the U.K. Conservative party’s first leadership ballot commences. Those who receive 16 votes or fewer will be eliminated, before further ballots take place next week, and we’re eventually left with a final couple of contestants for the wider party to choose from. Having played down his desire for a no-deal Brexit in a campaign speech on Wednesday, the U.K. premiership remains Boris Johnson’s to lose, according to bookmakers.
European nations are taking advantage of plunging yields by raising money via low-cost debt sales. There’s no shortage of demand either, with investors even lapping up an issuance from the Italian government on Wednesday, just as euro-area finance ministers prepare to meet in Luxembourg today to discuss penalties for Italy over its debt load. Bond traders aren’t bothered, and the discounted sales may well continue if the European Central Bank drops further hints of easier policy.
Asia stocks mainly fell for a second day with no real trade war conclusion in sight and tensions rife in Hong Kong, while Treasury yields ticked lower after a weak inflation report on Wednesday bolstered the case for Federal Reserve interest-rate cuts. Oil, meanwhile, languished near a five-month low following a surprise increase in American crude inventories. European equity futures are pointed lower but one sector that might get a lift today is U.K. homebuilders, following a rare bit of upbeat pricing data for a sector battered by Brexit uncertainty.
U.K. supermarket chain Tesco Plc gives a quarterly update after its shares were hit in May by industry data that pointed to weaker grocery spending. The Swiss central bank announces its rate decision and economic forecasts with the country’s currency having rebounded in recent weeks from a two-year low against the dollar. OPEC releases a report on forecasts for oil demand and production, just as some of the industry’s top executives attend a climate change meeting with Pope Francis at the Vatican.
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