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Sep 12, 2016

Bloomberg Markets - September 12, 2016 : Five Things You Need to Know to Start Your Day

Bloomberg Markets
Lorcan Roche Kelly

Global selloff continues

The selloff that 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 fall

The 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 speech

Federal 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.

Hillary's health

Democratic presidential nominee Hillary Clinton abruptly left yesterday's September 11 commemoration at Ground Zero in Manhattan, with her campaign later admitting that she had been diagnosed with pneumonia on Friday. If her health problems start to be reflected in polling data, it will be another headache for already rattled investors who had presumed she would become the next President of the United States. Her campaign has announced that she has cancelled a planned two-day trip to California to give herself time to recover.

One merger ends as another starts

Linde 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 reading 

This is what's caught our eye over the weekend.