Lorcan Roche Kelly
engulfed financial markets on Friday is continuing this morning. Overnight, the MSCI Asia Pacific Index dropped 2.1 percent, while all 33 industry groups in Japan's Topix index declined. In Europe, the Stoxx 600 Index was 1.7 percent lower at 5:40 a.m. ET, as all major western-European stock markets dropped. While bonds were also falling this morning, they were coming off the lows of the day by 5:40 a.m. S&P 500 futures were down 0.7 percent, with the drop in confidence being blamed on heightened concerns over central bank actions. Goldman Sachs Group Inc. suggests that equities may be sliding because everyone got too bullish.
Oil, metals fallThe financial asset rout is also being felt in commodities. A barrel of West Texas Intermediate for October delivery was trading at $45.03 at 5:58 a.m. ET, having dropped as-low-as $44.85 earlier. Meanwhile, OPEC has flipped its forecasts for rival supplies next year, predicting an increase in output from outside the group in 2017 instead of a decline, in the latest sign that the global surplus is persisting. Elsewhere in commodities - industrial metals are getting hit particularly hard, with nickel dropping as much as 4.1 percent and iron ore in China slumping to the lowest level since June. Gold was unchanged.
Brainard speechFederal Reserve Governor Lael Brainard is due to give a speech later today in Chicago that will be closely watched by investors looking for some guidance on the U.S. central bank's interest rate intentions. With hawkish comments from Boston Fed President Eric Rosengren last Friday taking some of the blame for that day's selloff, any sign of an inclination towards imminent tightening today may move markets further into the red. The futures-implied probability of a rate rise by the end of the year has risen to 60 percent this morning.
One merger ends as another startsLinde AG and Praxair Inc. ended talks on a $30 billion merger amid concerns raised by Linde that jobs and operations would be moved from Munich if the deal went through. Meanwhile, Agrium Inc. and Potash Corporation of Saskatchewan Inc. have reached an agreement to merge their companies, with the new entity set to become North America's largest producer of agricultural fertilizer.
What we've been readingThis is what's caught our eye over the weekend.
- The world's most elite bond-trading club isn't what it used to be.
- The tricky business of polling under Putin.
- PBOC’s Ma says China must act to contain housing market ‘bubble.’
- The great debate: Can technology transform the economy again?
- VW CFO explains how to take a $20 billion hit and also fund E-cars.
- Low-productivity sectors are the only thing keeping inflation afloat.
- RIP, Peak Oil.