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Mnuchin promises progress on tax reform, U.S. steel alleges Chinese dumping, and an OPEC deal didn’t help oil too much. Here are some of the things people in markets are talking about today.
Mnuchin’s Magic Touch
Treasury Secretary Steven Mnuchin helped lift U.S. stocks and the dollar to session highs after pledging that the new administration was “pretty close” to bringing forward major tax reform and remained focused on regulatory relief. Financials fueled gains in the S&P 500 index, which finished up 0.8 percent. Ten-Year Treasury yields also climbed, breaching 2.25 percent at their highs of the day.
Chinese Steel in Trump’s Crosshairs
The Trump administration started an investigation of steel imports at the urging of U.S. Steel Corp., which alleged that Chinese producers have colluded to fix prices at low levels. Commerce Secretary Wilbur Ross said rising U.S. imports of Chinese steel had “a very serious impact upon the domestic industry.” Shares of U.S. Steel had their best day since February, rising 7.4 percent. Bloomberg’s World Iron/Steel Index rose 1.4 percent.
Good News Does Little for Crude
Saudi Arabia’s oil minister said major producers reached an initial deal to continue their output cuts in order to rein in inventories to their five-year average. This revelation, however, failed to give oil prices a major shot in the arm, with front-month Brent futures edging just slightly higher on the day. One negative sign for crude: The physical market shows deteriorating Asian purchases and growing U.S. shipments. Oil’s pain, however, has been airlines’ gain: The S&P 500 Airlines Index ended up 1.8 percent, closing at its highest level since March 10.
Preliminary PMI Day
We’ll get an update on how some of the world’s largest economies are doing on Friday with the preliminary release of April purchasing managers’ indexes for the manufacturing sector. The Nikkei Japan Manufacturing PMI, slated for 9:30 a.m. Tokyo time, gave back a little ground in March but remained in expansionary territory at 52.4. The Markit Eurozone PMI has been on an absolute tear, rising to 56.2 in its last reading, though it’s expected to moderate somewhat. Since the reflation trade's fundamentals were partially rooted in surprisingly firm global growth at the end of 2016, continued readings pointing to progress in the manufacturing sector will be important to sustaining risk appetite. Also due out from Japan: Tertiary Industry Activity for February, expected to rise 0.3 percent month-on-month.
S&P/ASX 200 and Nikkei 225 equity futures are poised to open higher as of 5:30 a.m. Another day of widespread yen weakness seems poised to bouy domestic equities, while the Aussie dollar was the best-performing G10 currency on Thursday on the strength of iron ore futures. Chinese stocks still refuse to suffer a daily loss of 1 percent or more, but that doesn’t mean it’s all good news for the Shanghai Composite. The benchmark index ended Thursday at its lowest levels since Feb. 8.
What we’ve been reading
This is what caught our eye over the last 24 hours.
PBoC chief economist discusses new shadow banking regulations.
GM ceases operations in Venezuela after plant seized.
Don’t send a letter like this to a billionaire. Especially if you’re a CEO.
Bearish hedge funder Crispin Odey says he’s Mr. Lonely.
You’ve heard of dark pools. These are more like kiddie pools.
- Ontario becomes the newest Canadian region to introduce a foreign buyers’ tax.
The hottest rides at the Shanghai Motor Show.