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Happy Friday. I'm Jessica Menton, catching you up on the latest premarket movements as the week wraps up.
Stock futures are little changed after the U.S. increased tariffs on $200 billion of Chinese goods to 25%. Trade discussions are set to resume today. All three major averages are headed for their worst week since December, with the Nasdaq on course to snap a six-week winning streak.
Meanwhile, Uber's trading starts today. The ride-hailing firm priced its initial public offering at $45 a share, near the low end of its expected range. At that price, Uber commands a valuation of about $82 billion.
Amid this week's renewed trade tensions, our Ira Iosebashvili delves into why this year’s rally in emerging-market currencies is facing a test.
Markets in a Minute
Global stocks rallied Friday in the wake of Washington’s decision to impose higher tariffs on China, as investors pinned hopes on the continuing dialogue between the two nations.
This year’s rally in emerging-market currencies is facing a test as investors pull back on riskier bets amid renewed trade tensions and falling commodity prices.
After a sharp rise earlier in the year, the MSCI Emerging Markets Currency Index has stalled, retreating 1.3% from its February highs. Some individual currencies have fared far worse: the Argentine peso and the Turkish lira have both lost about 17% and the South Korean won is down around 5.5%.
Fresh trade tensions between the U.S. and China have been the most recent factor to pressure the assets of developing countries. Many emerging markets are sensitive to fluctuations in the global economy, and are especially attuned to growth in China, a key global consumer of everything from raw materials to technology.
At the same time, some investors tend to lighten up on comparatively risky assets like emerging markets and load up on havens such as the Japanese yen, which has been among the market’s best performers in recent days.
One recent casualty of the flareup has been the South Korean won, which has dropped to its lowest level in more than two years against the dollar. South Korea sends around a quarter of its exports to China.
Falling commodity prices are another concern. Worries over Chinese demand and the strength of the global economy have weighed on prices for copper and other industrial metals in recent weeks. That’s hurt the currencies of countries like Chile and Indonesia, exporters of copper and nickel, respectively.
Currencies that have benefited from higher oil prices this year are also in retreat as the crude rally reverses. The Russian ruble is off more than 2% from its late-April highs against the dollar, a move that has been echoed in the currencies of other oil-producing countries, including the Brazilian real.
Even if a trade deal is reached, emerging-market currencies still have to contend with a persistently strong dollar. Comparatively high U.S. interest rates have dulled the allure of emerging-market currencies and will likely continue to do so, as many developing countries look to ease monetary policy, said Win Thin, global head of currency strategy at Brown Brothers Harriman.
“Even if we get a deal, it’s not a magic wand for emerging-market currencies,” he said.
The yield on the benchmark 10-year Treasury note fell
for the fourth time in the past five trading sessions Thursday,
settling at 2.453% from 2.484% Wednesday. If the U.S. and China signal
that trade negotiations will continue, TD Securities projects the yield
on the 10-year Treasury note will remain between 2.40% and 2.50%.
U.S. corporate defaults fell for the second consecutive year in 2018
to 47, the lowest figure since 2014, according to S&P Global Fixed
Income Research. The consumer-services sector led with 15 defaults,
followed by the energy and natural resources sector with 14 apiece.
On this day in 1965, a young Warren Buffett took control of textile
maker Berkshire Hathaway, whose stock closed that day at $18 a share. On
Thursday, Berkshire shares closed at $314,400.
The U.S. consumer-price index for April, released at
8:30 a.m. ET, is expected to rise 0.4% from a month earlier and 2.1%
from a year earlier. Excluding food and energy, the forecast is for a
0.2% monthly gain and a 2.1% annual increase.
The Baker-Hughes rig count is out at 1 p.m.
U.S. federal budget figures are out at 2 p.m. The
Congressional Budget Office forecasts a $531 billion deficit through the
first seven months of the fiscal year, up $145 billion from the same
period a year earlier.
Fed governor Lael Brainard speaks at a community development research conference at 8:30 a.m., the Atlanta Fed’s Raphael Bostic speaks on the economy and monetary policy at 9 a.m., and the New York Fed’s John Williams speaks in the Bronx, N.Y., at 10 a.m.
Above, a factory in Dongguan, Guangdong province, China. PHOTO: ALEKSANDAR PLAVEVSKI/EPA/SHUTTERSTOCK
The U.S.-China trade fight is stinging global companies. From
the world’s biggest miners to German car makers and Japanese
manufacturers of iridescent powder for cosmetics, producers around the
world are bracing for collateral damage.
Occidental wins the battle for Anadarko. Ending one of the most high-stakes energy-deal dramas in years, Occidental struck a $38 billion agreement to buy Anadarko after Chevron bowed out of the bidding.
Symantec shares tumble after CEO exit. Chief Executive Greg Clark abruptly resigned Thursday, sending shares of the antivirus software provider tumbling 13% during after-market trading.
A Budweiser brewer is planning a $7 billion Hong Kong IPO. The Asian business of beer giant Anheuser-Busch InBev on Friday filed an application to list on the Hong Kong stock exchange, moving closer toward a multibillion-dollar initial public offering later this year.
BofA is mulling whether to scrap its First Data partnership. Bank of America is considering dissolving
the huge payment-processing joint venture it has with First Data and
developing its own business to move money between consumers and
merchants, The Wall Street Journal reported.
What We've Heard on the Street
“The biggest test of SoftBank founder Masayoshi Son’s audacious
strategy starts [Friday], when Uber goes public. A much bigger share of
the Japanese company’s near-$100 billion in technology bets will soon
join it and begin trading in the sometimes-unflattering public