Five Things You Need to Know to Start Your Day

Written by
Natasha Doff
Written by

Natasha Doff

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(Bloomberg) --

Trade war hurtles toward new phase, the ECB might hike sooner than expected and Glencore plans a $1 billion buyback. Here are some of the things people in markets are talking about today.

Tariff D-day

Shares in Asia dropped to a nine-month low as the trade war moves to a new stage on Friday with the prospective imposition of tariffs between the world's two biggest economies. Levies on $34 billion of China's exports will not only hurt the Asian nation, but the U.S. itself and the rest of the world, Gao Feng, China's Commerce Ministry spokesman, said at a press conference. Beijing's retaliatory tariffs will become effective “immediately” after the U.S. acts, according to the customs authority.

Earlier hikes?

Monetary tightening in the euro area might end up coming sooner than the market was expecting. Some European Central Bank policy makers are uneasy investors aren't betting on an interest-rate increase until December 2019 and see a move in September or October next year on the cards, according to people familiar with the matter. Traders upped the chance of a September move to 80 percent from less than 70 percent after the Bloomberg story. The repriced trajectory, as well as data showing German factory orders surged in May, helped strengthen the euro. Investors will also be scrutinizing Fed minutes later today for clues on the U.S.'s monetary trajectory.

Buyback boost

Shares of Glencore Plc jumped after the world's top commodity trader said it will purchase as much as $1 billion of its stock after it was hit by a U.S. Department of Justice probe earlier this week. The buyback program will start Thursday through year-end, the Swiss miner and trader said in a statement. Meanwhile, the war of words over oil prices continued between President Donald Trump and Iran, with the Islamic Republic's OPEC governor telling the commander-in-chief to stop tweeting. Speaking of commodity markets, Goldman Sachs Group Inc. has poured cold water on the notion that a trade war between the U.S. and China represents a serious threat to raw materials.

Markets mixed

Overnight, the MSCI Asia Pacific Index retreated 0.6 percent, while Japan's Topix index closed 1 percent lower as the yen strengthened 0.2 percent. China's Shanghai Composite Index dropped 0.9 percent. In Europe, the Stoxx 600 Index was 0.6 percent higher at 5:50 a.m., spurred by carmakers. S&P 500 futures pointed to a gain at the open, the 10-year Treasury yield was at 2.86 percent and gold retreated.

Brexmageddon continues

It seems that nothing, not even the English soccer team's World Cup success thus far, can help the beleaguered U.K. prime minister at the moment. Theresa May is fighting to win Cabinet backing for her Brexit plan as a compromise proposal that aimed to unite warring ministers was rejected by her chief negotiator. Jaguar Land Rover warned the U.K. government that bungling Brexit could derail billions of investments, kill jobs and hobble the iconic British carmaker, echoing recent alarms sounded by BMW AG and Airbus SE. And on top of all that, May is having to try to contain the fallout from the poisoning of two Britons in southern England that police say were exposed to the same nerve agent that afflicted a former Russian spy in March.