Date: December 24, 2018
United States:
U.S. Stock Futures Decline; Treasuries, Gold Gain: Markets Wrap
U.S. stock futures gave up earlier gains as investors remained on edge over the turmoil in Washington after the worst week for equities in almost a decade. The dollar fell with European and Asian shares. Futures on the Dow, S&P 500 and Nasdaq all retreated a day after Treasury Secretary Steven Mnuchin called top executives from the six largest U.S. banks to discuss liquidity. He also attempted to assure financial markets that Federal Reserve Chairman Jerome Powell would not be ousted from the central bank following an earlier report that said U.S. President Donald Trump has repeatedly discussed removing him. Banks and retailers were among the biggest decliners in the Stoxx Europe 600 Index. Havens, including gold, the yen and Treasuries, climbed. Mnuchin’s steps to placate markets were necessitated by increased volatility as the final quarter draws to a close. Concern around Powell’s future added to uncertainty just as holiday-related market closures crimped volumes. On top of that, the U.S. government shutdown looks set to last past Christmas as negotiations between Democrats and the White House continue over Trump’s demand for border wall funding. “It would be extremely damaging for the President to carry through on his vague inquiries about whether or not he can fire the head of the Federal Reserve,” Stephen Davies, CEO and co-founder of Javelin Wealth Management, told Bloomberg TV in Singapore. “That will do market confidence no good whatsoever.” Elsewhere, emerging market currencies and shares fell even as China’s top policy makers said they’ll roll out more monetary and fiscal support in 2019, ratcheting up the targeted stimulus of 2018. Oil fell even as some OPEC members pledged to deepen output cuts. The euro advanced against the dollar.
Europe:
U.K. Finance Watchdog Makes Less From Fines After a Bumper Year
The total value of fines handed out by the U.K.’s Financial Conduct Authority fell by almost 75 percent in 2018, after a bumper year in which it had secured penalties against the likes of Deutsche Bank AG, Merrill Lynch International and Rio Tinto Plc. The regulator handed out 60.5 million pounds ($76.6 million) in fines in 2018, more than half of which were accounted for by a single 32.8 million-pound penalty issued to Banco Santander SA’s U.K. unit on Dec. 19. That’s down from 230 million pounds in 2017 — a 74 percent drop. That year saw “a handful of absolutely huge fines,” said Jonathan Cary, a commercial disputes lawyer at RPC in London. This year’s largest fines, aside from Santander, were a 16.4 million-pound penalty for Tesco Plc’s banking arm for failures that allowed cyber attackers to steal funds, and a 5.2 million pound fine for Liberty Mutual Insurance Europe SE for failures in its oversight of mobile phone insurance claims and complaints handling. The watchdog fined Barclays Plc Chief Executive Officer Jes Staley 321,000 pounds in April, an amount that pales in comparison to some previous regulatory fines, while allowing him to hold onto his job. The move, which came after an investigation into his two attempts to identify a whistle-blower within Barclays, was seen as an early indication that the Financial Conduct Authority may tread cautiously when enforcing new rules for top executives. In July, it said it won’t fine former Royal Bank of Scotland Group Plc senior executives after an investigation into its small-business lending unit found it put its own profit over clients’ interests.
Asia:
India Stock Bears Tighten Grip in Thin Trade on Weak Global Cues
Indian stocks declined for a third day in holiday-thinned trading as the threat of slower global growth and its impact on corporate earnings added to uncertainty at the end of a tough year. The S&P BSE Sensex dropped 0.8 percent to 35,470.15 at the 3:30 p.m. close in Mumbai, with bulk of the losses coming in the last hour of the session. Volumes were about 40 percent below than the 30-day average. The NSE Nifty 50 Index also retreated 0.8 percent. Markets globally were roiled last week as renewed U.S.-China tensions and concern about a partial U.S. government shutdown added to negative narratives in the wake of the Federal Reserve’s pledge to continue reversing stimulus of the past decade. At risk in India is a strengthening earnings picture that has seen profits for 50 Nifty companies grow in six of the past eight quarters, according to Bloomberg data. Earnings at the Nifty companies are estimated to rise an average 19 percent this fiscal year that started April 1, and 22 percent next year. That compares with a 16 percent growth in the last year, according to Bloomberg data. “We see potential risks from a global slowdown and China-U.S. trade issues, oil prices and national elections,” Kotak Securities Ltd. analysts led by Sanjeev Prasad wrote in an investor note on Dec. 20.