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U.S. stocks tumble amid a rout in industrial and technology shares. Ten-year Treasury yields breach 3% for the first time since 2014. And President Donald Trump praise North Korean leader Kim Jong Un in a dramatic shift in rhetoric. Here are some of the things people in markets are talking about.
Stocks tumbled as a rout in the shares of industrial, materials and technology companies sent indexes spiraling lower amid a raft of earnings and renewed selling in the bull market’s biggest winners. The 10-year Treasury yield pierced 3 percent for the first time in four years. The Dow Jones Industrial Average fell for a fifth day, the longest losing streak since March 2017. The sell off accelerated after industrial bellwether Caterpillar Inc. said that the first quarter was its "high water mark" for the year. The Nasdaq 100 Index slumped 2.1 percent, with Alphabet Inc.’s rise in capital spending sending its shares lower 4.5 percent. The dollar weakened after hitting the highest since January, while crude slipped back toward $67 a barrel and gold rallied. Asian markets may get off to a sluggish start, with Australia and New Zealand shut for Anzac Day, and a quiet session for economic data in the region.
Trump Does 180 on ‘Rocket Man’
Trump complimented Kim Jong Un as "very honorable" so far and said he hopes to hold his summit with the North Korean leader "very soon." It's a dramatic shift for the U.S., which has long condemned the Kim family dynasty for brutality and deceit. Trump himself last year derided Kim as “Little Rocket Man” and said it’s “hard to believe his people, and the military, put up with living in such horrible conditions.” Trump told reporters at the White House Tuesday, "we’re having very good discussions.” Not everyone is buying all the optimism surrounding the historic summit between the two Koreas this week, however.
Mnuchin Headed to China ‘Within Days’
U.S. Treasury Secretary Steven Mnuchin will depart for China within days to negotiate over U.S. trade disputes, Trump said in a meeting with French President Emmanuel Macron. “We have a very good chance of making a deal,” the president added. Meanwhile, China's leaders this week gave their strongest signal since 2015 that growth could slow and they're prepared to tweak policy if threats grow. Hard work is needed to meet this year's economic targets amid growing trade and financial risks, according to a statement.
China’s $7 Trillion Housing Problem
The next front in China’s crackdown on debt is the one closest to home. On the back of a boom in property prices, household borrowing has been climbing for ten straight years, at a pace that rivals any such run-up in major economies. At $6.7 trillion, and a record 50 percent of gross domestic product, China’s private debt is now approaching developed-world levels and crimping the power of the consumer to spend. Much of households’ surging debt is linked to China’s housing bubble, which has seen new home prices in Beijing and Shanghai jump more than 25 percent over the last two years.
Takeda Takes Another Run at Shire
Takeda is nearing a preliminary agreement to acquire Shire after the Japanese drugmaker sweetened its roughly $60 billion bid for the biotechnology company, according to people with knowledge of the matter. Shire’s board “is considering its position” on a new bid, the company said in a statement Tuesday after Bloomberg News reported that the companies were nearing a preliminary agreement. Shares gained in late trading in New York after Reuters reported that the companies plan to announce a deal on Wednesday. The two companies have been working on a tentative agreement on price, the people said, declining to be identified as the discussions are confidential.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- French President Macron proposed a new Iran deal to get the U.S. on board.
- While many CEOs are fighting China tariffs, some companies are pushing for more.
- Emerging-market investors are experiencing some memory loss.
- Tencent and Alibaba may be the "two most important companies in the world."
- VW teams with Chinese firms for $18 billion technology push.
- Mercedes is hoping to woo billionaires at the Beijing auto show.
- The G-7 is looking to crack down on “disinformation campaigns.”
— With assistance by Garfield Clinton Reynolds