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Markets React to BOE Plan to Raise Capital Buffer

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It's a huge day for central bank speakers, Google gets the EU antitrust treatment, and opposition to the U.S. health care bill mounts in the Senate. Here are some of the things people in markets are talking about today.

Draghi, Carney and Yellen

Investors face a triumvirate of central bank talkers today, with the European Central Bank's Mario Draghi addressing the bank's annual forum in Portugal, the Bank of England's Mark Carney presenting the Financial Stability Report and Federal Reserve Chair Janet Yellen speaking on global economic issues in London. Draghi was first up this morning, giving a speech urging persistence in stimulus, with his comments lifting the euro by 0.6 percent to $1.1248. Mark Carney may flag concerns over the rapid growth in consumer lending when he answers questions following the publication of the report, which revealed the bank's plans to increase capital requirements for U.K. lenders by 11.4 billion pounds ($14.5 billion). Janet Yellen is due to speak at 1:00 p.m. Eastern Time.

It's not about the money

Alphabet Inc.'s Google has been hit with a record 2.42 billion euros ($2.7 billion) antitrust fine by EU regulators over the way the company promotes its shopping service on its web searches. For the company, with $90 billion in cash, the size of the fine is probably not the big issue as what's really at stake is what changes may be forced on how Google ranks search results, something which has been one of its biggest sources of sales growth. 

Health care opposition

The plan to repeal Obamacare seems less likely to succeed after at least three Republican senators said they would vote to block the current version of their party's health care bill, moving Majority Leader Mitch McConnell further away from the 50 votes he needs to secure passage of the measure. The Congressional Budget Office estimated that the bill would increase the number of uninsured Americans by 22 million. Following yesterday's Supreme Court decision partially reviving President Donald Trump's travel ban, the State Department said it would implement the changes within 72 hours of the ruling. 

Markets mixed

Overnight, the MSCI Asia Pacific Index rose 0.1 percent, while Japan's Topix index added 0.4 percent, closing at the highest level since August of 2015. In Europe, the Stoxx 600 Index was 0.4 percent lower at 5:45 a.m. after being dragged lower by the strengthening euro following Mario Draghi's comments. S&P 500 futures were broadly unchanged

Yuan surge, Hong Kong plunge

The offshore yuan jumped as much as 0.7 percent in a sudden afternoon spike, while the currency traded in Shanghai's onshore market climbed 0.5 percent. Traders said the moves looked like an intervention aimed at keeping the currency close to 6.8 per dollar. In the Hong Kong stock market, at least 17 companies plunged suddenly, dropping by more than 40 percent for a combined market-cap loss of $6.1 billion, with traders pointing to links bto a brokerage that's under regulatory investigation.

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