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Sen. Corker Questions Trump’s Competence and Stability

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Terror attacks hit Spain, risk aversion spikes in markets, and key Republicans increase the pressure on Trump. Here are some of the things people in markets are talking about today.

Terror attacks

A terrorist rammed a vehicle into tourists in the Spanish city of Barcelona yesterday in an attack that killed 13 people and left at least 100 injured. Hours later, police killed five suspected terrorists in a confrontation in the resort town of Cambrils, south of Barcelona. The driver of the van that caused the carnage in the initial attack is still on the loose

Risk off

The S&P 500 Index posted its second-worst performance of the year yesterday, and risk aversion has spread across the globe, with the MSCI Asia Pacific Index losing 0.5 percent overnight and Japan’s Topix index closing 1.1 percent lower. In Europe, the Stoxx 600 Index was down 1.0 percent by 5:10 a.m. Eastern Time as the Barcelona attack added to fears over U.S. policy paralysis. S&P futures pointed to another day of losses. The yield on 10-year Treasuries remained below 2.2 percent, the yen rallied to the highest level in almost four months on a closing basis, and gold climbed

Trump pressure

Senator Bob Corker told reporters in Tennessee that “radical changes” need to take place in the White House, while Senate Republican Tim Scott of South Carolina, said that President Donald Trump had compromised his moral authority with his response to racial violence in Charlottesville, Virginia. The president yesterday abandoned plans for an advisory council on infrastructure spending, following the disbanding of two other business panels on Wednesday, in the latest sign that corporate executives are distancing themselves from the administration. Vice President Mike Pence doubled down on his support for Trump while on a visit to the Panama Canal. “I think the United States once again has a president whose vision, energy, and can-do spirit is reminiscent of President Teddy Roosevelt,” he said yesterday.

Direct(ed) investment 

Authorities in China will restrict domestic companies from investing in overseas property, hotels, entertainment and sports clubs, according to a State Council guideline posted on the government’s website. Companies will instead be encouraged to support the Belt and Road initiative linking the country across Asia and Europe, which has faced questions about the financing of the ambitious project.

Metal top?

The rally in base metals continues, with zinc holding above $3,100 a metric ton this morning, but the outlook for commodities is starting to become cloudy. Major zinc miners have announced the restarting of mothballed projects, which should help supply constraints of the metal. Falling house prices in China as property curbs start to bite are likely to put pressure on steel prices.

What we've been reading

This is what's caught our eye over the last 24 hours.

S&P’s biggest drop was a selloff waiting to happen
ECB searches for stimulus flexibility as end of QE approaches.
Holidays on hold in bond market defying usual August slowdown.
Why China can’t free the yuan.
A look inside one of the world’s biggest bitcoin mines
How a blue pill is stopping the spread of HIV.
We all come from algae

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