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Terror attack to shape closing stretch of U.K. election campaign, Saudi Arabia raises selling prices for crude, and Mexican state election could be a bellwether for 2018. Here are some of the things people in markets are talking about.
Terrorism Dominates U.K. Election
An attack in London that killed seven and injured more than 20 on Saturday night has fueled a more explicitly political response from party leaders ahead of the U.K.'s June 8 general election. On Sunday morning, Prime Minister Theresa May said there was “far too much tolerance of extremism,” a remark that was seen as a shot at Jeremy Corbyn, whose Labour Party has been ascending in recent polls. Corbyn replied by arguing that the U.K. must examine its relationships with Saudi Arabia and other Gulf states that he said “have funded and fueled extremist ideology.” Meanwhile, U.S. President Donald Trump used the occasion to criticize Sadiq Khan, the mayor London, and reiterate the need for a travel ban, a nod to his executive order that has been blocked by the courts.
Aramco Hikes
Oil prices haven't been moving higher since the recent extension of output curbs by OPEC and other major producers. But if you're Saudi Aramco's customers, they are. The company announced on Sunday that it was raising prices for its July sales of all grades of crude for customers in Asia, the U.S., and Northwest Europe. The broadness of the price hikes, as well as Aramco's recent track record in following through on sought-after sales cuts to its Atlantic customers, suggest this move may not directly be aimed at reducing U.S. crude inventories. Saudi Arabia's Energy Minister Khalid Al-Falih previously said that the nation's exports to the U.S. would drop “measurably.” Payroll growth in the U.S. oil and gas industry turned positive on an annual basis in May after 25 months in negative territory, another reminder that OPEC faces an uphill battle in pressuring American shale production.
Mexico Votes
On Sunday, Mexicans in the nation's most populous state headed to the polls for a vote that's poised to shed light on what to expect in the 2018 general election. Polls suggest a tight race between the ruling Institutional Revolutionary Party and the outsider, populist Morena party. The closeness of the race is already seen as a negative for the incumbent party, as this is a region it has not lost the governorship in for nine decades. The January gasoline price hike, pick-up in violent crime, and accusations of corruption have emerged as the key issues in the run-up to the election. A victory by Morena's Delfina Gomez could lead investors to reassess the prospects for the private development of the country's national resources.
Losing Faith
Defense ministers from the Asia-Pacific region expressed concern about U.S. President Donald Trump's unpredictability and apparent distaste for major global partnerships at a summit involving officials from 48 countries. Participants in the Shangri-La Dialogue in Singapore stressed the need for greater regional security cooperation to guard against terrorism, chiefly the threat posed by returning Islamic State fighters. Malaysian defense minister Hishammuddin Hussein judged this potential menace to be more worrisome than North Korea's nuclear ambitions and the territorial disputes in the South China Sea.
Coming Up...
The day's data releases from the Asian Pacific region kick off at 9:30 a.m. Tokyo time with Japan's Nikkei services purchasing managers' index for May, which came in at 52.2 last month. Also on deck: the May update from India and China's services sectors, both of which were above the 50 level that points to expansion in their April prints. Australia is also slated to publish the monthly change in job advertisements for May, which had booked a 1.4 percent rise in the prior reading.
What we've been reading
This is what caught our eye over the last 24 hours.
Why Americans aren't buying the Japanese stock rally.
Bond traders bet on yields falling even as Fed hike looms.
Tiananmen vigil draws smallest crowd in nine years.
Putin downplays dinner party with Flynn.
Quant manager bets on stocks that stay out of the headlines.
- Europe looks to calm industries shaken by Chinese ascendance in global trade.
‘Wonder Woman' sales top $100 million in its opening weekend.
To contact the author of this story: Luke Kawa in New York at lkawa@bloomberg.net.
To contact the editor responsible for this story: Adam Haigh at ahaigh1@bloomberg.net.
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