Five Things You Need to Know to Start Your Day
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Stocks extend losses, the dollar rallies and Credit Suisse's problems continue. Here are some of the things people in markets are talking about today.
Markets are down
Asia stocks fell overnight, with the MSCI Asia Pacific Index dropping 1.1 percent while the Shanghai Composite Index slid 1.6 percent, closing below 3,000 and keeping its title as the worst performing major global benchmark tracked by Bloomberg for 2016. In Europe, stocks are being led lower by commodity producers on the last trading day of this holiday-shortened week. The Stoxx Europe 600 Index was 1 percent lower at 9:25 a.m. in London. U.K. clothing retailer Next Plc plunged as much as 11 percent after it lowered full year guidance. S&P 500 futures were 0.5 percent lower.
The Bloomberg Dollar Spot Index is rallying for a fifth day, its longest winning streak in two months. Federal Reserve Bank of St. Louis President James Bullard said that the central bank should consider raising rates at its April meeting, while Goldman Sachs Group Inc. said that the Fed shouldn't be worried about dollar strength as it poses little threat to policymakers' inflation goals. Pimco Investment Management Co., meanwhile, sees limits to the policy divergence trade and predicts the greenback will remain broadly stable against the euro and yen. Whatever the outlook, commodities are feeling the pressure right now, with oil, industrial metals, and gold, all trading lower.
Credit Suisse, day two
The fallout for Credit Suisse Group AG continues following yesterday's announcement of jobs cuts and Chief Executive Officer Tidjane Thiam's bombshell on the bank's illiquid positions leading to a second quarterly loss. Questions are now being asked over how the company will reduce its leverage in its global markets unit to $290 billion from $380 billion by the end of this year, as the list of big names at the bank leaving to pursue "outside interests" grows. For CEO Thiam, it's not all bad news as he was paid $4.7 million in his first six months in the job.
Bearish bets on the pound (though options that expire in three months - i.e. just after the referendum on U.K. membership of the European Union) have reached a record high. At least 11 billion pounds ($15.5 billion) has been wagered this year on options that would profit if sterling fell to or below $1.3502, the lowest level for the currency against the dollar since 1985. In 14 of the past 15 years the pound has strengthened against the greenback in April, but this time it might be different.
At 8:30 a.m. ET weekly jobless claims data will be published, with economists forecasting a slight rise to 269,000. Durable goods orders for February will also be released at that time. Even though markets are closed tomorrow, the Bureau of Economic Analysis is due to publish its third reading of fourth quarter 2015 GDP at 8:30 a.m ET and while there is little change expected in the headline number, company profits data for the period will be released for the first time.
What we've been reading
This is what's caught our eye over the last 24 hours.
- Five countries, five beleaguered leaders.
- Wall Street's 0.01%: An inside look at Citi's secret client list.
- Three long-term consequences of negative rates.
- Japan's bond market is close to its breaking point.
- Investors are differentiating between CLOs, even if rating agencies aren't.
- Rockerfellers dump Exxon holdings that made family's fortune.
- Goodbye, Silicon Valley. Hello world.