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The Bank of England cuts rates, expands QE, oil holds its gains, and Berkshire's under scrutiny. Here are some of the things people in markets are talking about today.
Bank of England rate decision
The Bank of England decided to cut rates to 0.25 percent, expand QE by £60 billion and include corporate bond purchases in its easing plan, in its decision announced at 7:00 a.m. ET. The British pound dropped to $1.3221 in the immediate aftermath of the announcement. The decision will be followed by a press conference at 7:30 a.m. ET. Businesses in the U.K. are looking beyond the Bank of England and are calling on Chancellor of the Exchequer Philip Hammond to deliver a “bumper” fiscal stimulus.
After its biggest gain in three weeks yesterday, oil is holding above $40 this morning, with a barrel of West Texas Intermediate for September delivery trading at $40.62 at 5:35 a.m. ET. Prices of the commodity were boosted by data showing that U.S. gasoline supplies fell more than expected. Domestic production in the U.S. remains under pressure, down 1 million barrels a day in July from a year earlier, while crude imports surged to the highest level since 2012. The bounce in oil prices is lifting emerging market assets, with Malaysia's ringgit among the biggest winners.
Berkshire draws fed scrutiny
Warren Buffett’s Berkshire Hathaway Inc. is being examined by U.S. regulators to see whether its stake in Wells Fargo & Co. violates rules for how much credit banks can extend to corporate insiders, according to two people familiar with the review. Berkshire's 16 percent investment in American Express Co., which does substantial business with Wells Fargo, is of particular concern. Elsewhere in investment news, Goldman Sachs Group Inc.’s retirement plan is pulling its cash from a fund run by former employee Daniel Och, planning to reduce its holding to zero the end of the month. And Steven Cohen, fined a record $1.8 billion after pleading guilty to securities fraud in 2013, is looking to hit the ground running when he is allowed once again to manage outside money in January 2018.
The MSCI Asia Pacific Index rose 0.7 percent overnight as shares in Asia rebounded from their worst decline in five weeks. Japan's Topix index added 0.9 percent as earnings lifted shares and pressure on the yen eased. In Europe, the Stoxx 600 Index was 0.5 percent higher at 6:06 a.m. ET as banks recovered some of this week's losses and energy shares tracked oil prices higher. S&P 500 futures were flat.
With U.S. payrolls data due tomorrow, markets will keep a close eye on today's initial jobless claims number to see if it maintains its run of sub-270,000 readings when the data is released at 8:30 a.m. ET. At 10:00 a.m. we get factory orders and durable goods numbers for June.
What we've been reading
This is what's caught our eye over the last 24 hours.
- This quiet market has traders on edge.
- The Greenspan put's gone wild as critics see markets hamstringing Fed.
- This obscure corner of London finance is suddenly a key battleground.
- Nike gives up on golf equipment.
- Most Russians don't know what a central bank is.
- Quick, what share of corporate directors are women?
- Republicans are stuck with Trump despite fears he'll destroy them.
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