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U.K. flash PMI shows how hard Brexit is hitting economy, stocks and commodities fall, and Donald Trump makes a speech. Here are some of the things people in markets are talking about today.
U.K. PMIs plunge
It is one month since the Brexit vote tomorrow, which means data from the U.K. are catching up with the post-vote economy. This morning, a composite Purchasing Managers’ Index estimate published by Markit Economics fell to 47.7 for July, its lowest level since April 2009. The pound fell sharply after the data was released and was trading at $1.3131 at 5:45 a.m. ET. U.K. Chancellor of the Exchequer Philip Hammond said he's ready to "reset" the country's fiscal policy later in the year, if needed. Stay up to speed on all the Brexit developments by subscribing to our new newsletter, the Brexit Bulletin.
Bottom in oil?
Schlumberger Ltd. and Halliburton Co.. the world’s two largest providers of oilfield drilling and fracking services, have said that the worst of the two-year-old oil market crash may be over. The first half of the year has seen something of a pick-up in deals, while the backlog of drilling, but not fracked, wells in the U.S. has stopped growing. The one thing that is missing from the picture so far is a recovery in oil prices. A barrel of West Texas Intermediate for September delivery was trading at $44.64 at 5:59 a.m. ET, down almost 3 percent this week.
The MSCI Asia Pacific Index declined 0.5 percent overnight, with the Topix index slipping 0.9 percent as investors focussed on comments opposing helicopter money by the Bank of Japan's Haruhiko Kuroda in an interview, recorded in June, which was broadcast on the BBC yesterday. In Europe, the Stoxx 600 Index was 0.4 percent lower at 6:05 a.m. ET, as concerns over the U.K. economy outweighed data published this morning which showed German manufacturing output reached its highest level since early 2014.
Yuan halts decline
The Chinese yuan, which has dropped 3.3 percent since its 2016 high reached in March, may be about to halt the losses as speculation mounts that the central bank is drawing a line in the sand at 6.7 per dollar. The weakness in the currency has triggered an increase in the amount of cash leaving the country, according to Goldman Sachs Group Inc., who calculate that outflows totalled $49 billion in June, up from $25 billion in May. The one thing that has analysts scratching their heads about the yuan's decline this year is how well investors, particularly in U.S. stocks, have been able to ignore the slipping currency.
Trump makes a speech
Republican party presidential nominee Donald Trump make his speech accepting the nomination yesterday at the party's convention in Cleveland. He painted a dark view of the United States and offered himself as the sole candidate capable of fixing the country's problems. On the Democratic side of the political divide, speculation is mounting that presumptive presidential nominee Hillary Clinton may announce her choice of running mate as early as today.
What we've been reading
This is what's caught our eye over the last 24 hours.
- It looks like the U.S. consumer just had its best quarter in a decade.
- Draghi's sopping up whatever liquidity was in European credit.
- Chinese companies are turning Japanese.
- World's longest plane search suspended as MH370 hopes fades.
- McDonald's stops selling Big Mac in Venezuela due to bread shortage.
- Britain goes back to bronze age with plans to revive tin mining.
- The Bank of England wonders if the IMF has enough lending capacity.