Market Outlook – July 9, 2018

Global Stocks Hit Two-Week High

 

The favorable U.S. jobs report for June drove global shares higher to hit a two-week high on Monday. The pound managed to stave off the impact of the news that Brexit Secretary David Davis and Minister Steven Baker had resigned. The two opposed British Prime Minister Theresa May’s plan for leaving the EU.

The MSCI world equity index .MIWD00000PUS, which tracks shares in 47 countries, rose 0.4% as the pan-European STOXX 600 Index went up 0.6% on the strength of mining stocks. Japan’s Nikkei ended 1.2% higher while E-Mini futures for the S&P 500 ESc1 firmed up 0.4%. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 1.3% despite the implementation of U.S. tariffs on Chinese imports.

U.S.-China Trade War Begins

 

The U.S.-China trade war has begun. Chinese customs officers delayed the clearance of some U.S. goods on Friday pending official instructions from the central government on whether to start collecting the new import tariffs. Local customs at Qingdao port allowed American products held up on Friday after imposing higher tariffs on the goods.

In Shanghai, customs officials also started collecting new tariffs as of Monday. Among the products from the U.S. are fruits and wine. Beijing is responding with punitive tariffs on U.S. products with an equivalent amount that America imposed.

China’s foreign ministry spokesperson announced that China has begun implementing new tariffs of 25% on some U.S. goods including automobiles and soybeans. The ship Peak Pegasus which was currently anchored at the port of Dalian carries 70,000 tons of U.S. soybeans. Beijing’s updated and raised the tariffs. The ship raced to reach China before the tariffs took effect but remained docked as of Monday afternoon.

Citigroup Prepares to Attract Depositors Digitally

 

Citigroup Inc. (C) is preparing to expand its wealth management business without necessarily opening new branches. The bank is poised to level up and take deposit taking to a new level. They will introduce a new app by the third quarter in the hope of attracting individual depositors and build customer base. Most big rivals grew their deposits dramatically following the 2007-2009 financial crisis. Citigroup closed one-third of its branches back then.

The bank is confident that once they start marketing, more clients can be lured. David Chubak, head of global retail banking and mortgage, said, “People are willing to switch to a bank that is able to provide this kind of mobile-first experience.”

Weak Debut of Xiaomi  in HK

 

The world’s biggest technology float in almost four years was somewhat a disappointment. Chinese smartphone maker Xiaomi Corp had a weak debut in Hong Kong on Monday. The firm’s shares slid as much as 6% on valuation concerns. It became an ominous sign for its peers in the technology sector that are lined up to list soon. The IPO comes at the beginning of the U.S.-China trade war.

The trade disputes between the two countries have shaken markets over the past weeks. Hong Kong’s stock market benchmark even dropped to a nine-month low last week. Xiaomi’s IPO price was HK$17 per share but it closed lower at HK$16.80. At one point during early trading, the price hit a low of HK$16.

Tencent Plans to List Music Unit in the U.S.

 

Tencent Holdings Ltd., China’s biggest music-streaming company, said it is looking to spin off and list its online music business in the United States. The proposed listing of the Chinese internet giant is a clear indication that the once struggling online music industry is getting its grove back.

Spotify Technology SA (SPOT) is the recognized market leader even before its successful debut in April. SPOT took the direct listing route instead of the traditional IPO procedure. The number of listeners that is streaming music through smartphone apps is increasing despite piracy issues.

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