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Markets react to a failed coup in Turkey, Softbank to buy U.K.'s ARM, and the Republican National Convention kicks off. Here are some of the things people in markets are talking about today.
Friday's failed coup in Turkey and President Erdogan's subsequent purge of the forces accused of backing the putsch has - needless to say - made some investors nervous about the country. Turkish stocks and bonds are sliding this morning. The lira, which was still trading when the army took to the streets on Friday, is recovering some of its losses, but remains well below its pre-coup levels at 2.9637 to the dollar as of 6:07 a.m. ET. The international political fallout is likely to continue for some time, with Erdogan demanding the U.S. extradite the moderate cleric he accuses of masterminding the failed revolt.
Softbank to buy ARM
SoftBank Group Corp. agreed to buy chip-maker ARM Holdings Plc for 24.3 billion pounds ($32 billion), paying 1,700 pence in cash per share, a 43 percent premium to Friday's close. U.K. Chancellor of the Exchequer Philip Hammond issued a statement welcoming the deal, saying it showed the strength of the British economy in the wake of the Brexit vote. Looking at the deal, it seems that the fall in sterling since the vote may have helped in the timing.
While weaker sterling seems to be helping in corporate acquisitions, the future for U.K. property is less certain following the Brexit referendum. While early data suggests that the market remains resilient, Societe Generale SA analysts are warning that London home prices may fall more than 30 percent as Brexit puts an end to the city's seven-year housing boom. There were mixed messages from Bank of England policy makers on the timing of a response to an economic downturn from the vote, with Gertjan Vlieghe saying yesterday that the U.K. needs a range of stimulus, while this morning Martin Weale said he needs to see firmer evidence of the impact on the economy before he would support additional boosts.
Markets inch higher
The MSCI Asia Pacific Excluding Japan Index added 0.4 percent overnight as investors shrugged off concerns from Turkey's failed coup. Japanese markets were closed for a holiday. In Europe, the Stoxx 600 Index was 0.2 percent higher at 6:17 a.m. ET, and is now close to recovering all post-Brexit losses. ARM Holdings Plc jumped 43 percent following the Softbank deal. S&P 500 futures gained 0.1 percent.
RNC kicks off
The Republican National Convention kicks off in Cleveland today, with expectations that presumptive nominee Donald Trump will get a bumpy ride. Trump, who formally introduced his vice-presidential pick over the weekend, has run a campaign filled with dire warnings about the U.S. and the world. Republican stalwarts are hoping that he changes tactics at the convention.
What we've been reading
This is what's caught our eye over the weekend.
- Oil producers are preparing for a second-half slump as the rally sputters.
- Saudi Arabia plans a shipbuilding complex to support oil exports.
- More easing is expected from the ECB - just not yet.
- It's free gift season in the London property market.
- Goldman might struggle to regain its fixed-income market share.
- Brexit leaves Ireland facing a 'mind-boggling' crisis.
- And Nigeria finds a national crisis in every direction it turns.
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