Five Things You Need to Know to Start Your Day
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Oil hits $55 for the first time since July 2015, China moves to protect the yuan, and there's lots of economic data out. Here are some of the things people in markets are talking about today.
A barrel of West Texas Intermediate traded above $55 this morning, the highest level for the contract since July 2015. The rise comes after local media in Kuwait reported that the country has cut output by 130,000 barrels a day, a sign that the OPEC deal to reduce production may be implemented successfully. In the U.S., drillers added rigs for the ninth week, boosting the number to the highest in about a year.
China attempts to control capital
Chinese citizens converting yuan into foreign currencies face new requirements as of Jan. 1, including having to pledge that the money will not be used to purchase overseas properties. While there are doubts over whether the new policies will do much to stem flows from the yuan, the effects could be seen in the share prices of Macau casino operators, which slumped in overnight trading. Authorities in China added 11 currencies to the yuan reference basket last week, reducing the weight of the dollar to 22.4 percent, a move that has analysts in disagreement over whether this will increase or decrease the currency's volatility.
U.K. manufacturing rises, German unemployment falls
Manufacturing in the U.K. grew at the fastest pace in 2 1/2 years in December, with the IHS Markit Purchasing Managers Index coming in at 56.1 for the month. In Germany, unemployment dropped by a seasonally adjusted 17,000 — more than the 5,000 expected by analysts — while inflation jumped by 1.4 percent, putting pressure in bond yields across the euro area this morning. Manufacturing and services data from China showed the economy there continues to be robust, while Markit manufacturing data for the U.S. is due at 9:45 a.m. ET.
Global equity markets are starting the new year on the front foot. Overnight, the MSCI Asia Pacific Index excluding Japan Index gained 0.4 percent, boosted by positive China data. In Europe, the Stoxx 600 Index was 0.6 percent higher at 5:20 a.m. ET. The index is set to enter a bull market should the level hold into the close, with gains of more than 20 percent since February's low. S&P 500 futures added 0.6 percent.
Trump's trade representative
President-elect Donald Trump has picked China-critic Robert Lighthizer to head the U.S. Trade Representative office, according to a person with knowledge of the matter. If confirmed, the appointment, coupled with that of Peter Navarro last month, would show the PEOTUS intends on following through on his campaign promise to take a hard line on China.
What we've been reading
This is what's caught our eye over the holidays.
- The dollar rally is adding to uncertainty as Fed weighs 2017 rate hikes.
- The biggest economies face a $7.7 trillion bond tab as bull run ends.
- House GOP votes to strip ethics office of independent status.
- Deutsche Bank's former rainmaker is joining Cantor as President.
- These are the most popular investor picks for emerging markets in 2017.
- Solar could beat coal to become the cheapest power on Earth.
- Grab your ear muffs, the new year's arriving with a frigid bang.