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Top 5 Things to Know in the Market on Tuesday

Forex1 hour ago (Oct 08, 2019 06:24AM ET)
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Investing.com -- The NBA becomes the latest victim of the U.S.-China dispute, further harming the atmosphere ahead of Thursday's trade talks. Meanwhile, Brexit talks are close to breaking down and Boeing's 737 MAX may be on the ground for even longer than feared. Here's what you need to know in financial markets on Tuesday, 8th October.

1. Beijing hits the NBA as the U.S. hits China tech cos.

China said its state broadcaster will suspend broadcasts of NBA games in response to Commissioner Adam Silver’s defense of a tweet by Houston Rockets General Manager Daryl Morey that expressed support for pro-democracy protesters in Hong Kong.

"I am an American and there are these values that are deeply rooted in the DNA of the NBA and that includes freedom of expression for its employees," Silver told a news conference in Japan.

China’s move comes only hours after the U.S. blacklisted 28 Chinese entities, including surveillance camera maker Hikvision, for their role in China’s alleged repression of ethnic Uighurs in the western province of Xinjiang.

The business-specific actions further complicate the trade talks between the U.S. and China which are due to resume on Thursday. President Donald Trump said on Monday he had little interest in a partial or interim deal.

2. Stocks to open lower; Yum! and Domino's earnings due

U.S. stock markets are set to open lower as the tit-for-tat actions make the prospect of a trade truce less likely.

By 6:15 AM ET, Dow futures were down 168 points or 0.6%, while S&P 500 Futures and Nasdaq 100 futures were both also down 0.6%. The yield on the 10-year Treasury bond was down 3 basis points at 1.53%.

Yum! Brands (NYSE:YUM) and Domino’s Pizza are due to report their earnings for the three months to September before the open, while figures from Levi Strauss (NYSE:LEVI), which has struggled since listing earlier this year, are also due in the course of the day.

3. Powell to speak as data continues to deteriorate

Federal Reserve Chairman Jerome Powell is due to speak at 1:50 PM ET, potentially casting light on any shift in the Fed’s thinking ahead of the central bank’s next policy meeting on Oct. 31. Chicago Fed president Charles Evans is due to appear a quarter of an hour earlier.

Before then, there will be the release of September’s producer price inflation data at 8:30 AM and the Fed’s Redbook survey at 8:30 and 8:55 AM respectively. The NFIB Small Business Optimism index, just released, fell to 101.8 from 103.1 in September.

Overnight data from the rest of the world did little to change a narrative of a world economy that continues to lose momentum under pressure from the U.S.-China dispute and from a looming Hard Brexit (see below): Germany’s industrial production rose a modest 0.3% in August – something likely to prove a brief uptick given that factory orders continue to fall. Japan’s household spending also rose less than expected.

4. Pound falls as Brexit talks lurch closer to breakdown

The pound fell 0.5% against the dollar and euro and is on course for its lowest close in over a month, after German Chancellor Angela Merkel told U.K. Prime Minister Boris Johnson that his plans for avoiding customs checks on the Irish-U.K. border were unworkable.

U.K. government sources conceded that the German position, which is shared by Ireland and the EU’s negotiating team, make it as good as impossible that the two sides will finalize a transitional deal to cushion the impact of Brexit by next week’s summit.

A report in The Spectator Tuesday cited a government advisor as still expressing hope that the government can get around a law that requires Johnson to seek an extension of the Oct. 31 deadline in such a case.

5. 737 MAX return may be delayed further

The Wall Street Journal reported that the Boeing (NYSE:BA) 737 MAX’s return to service may be delayed still further by the European Aviation Safety Agency’s refusal to accept FAA assurances that the planes are safe.

Boeing (NYSE:BA) has indicated it expects the 737 MAX to be cleared by the FAA before the end of the year. Neither regulator publicly confirmed the WSJ’s reporting.

Top 5 Things to Know in the Market on Tuesday
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