September 24, 2019
U.S. Futures Rise on Trade Hopes; Treasuries Gain: Markets Wrap
“U.S. equity-index futures advanced and European stocks rose modestly with Asian shares as investors weighed hopes for high-level trade talks next month against mixed economic data from around the globe. The pound climbed after a court ruling key to Brexit. Contracts on the three main U.S. equity benchmarks all pointed to a firm open after Treasury Secretary Steven Mnuchin confirmed Chinese Vice Premier Liu He is headed to Washington in coming weeks and China was said to have given waivers for tariff-free American soy purchases. The Stoxx Europe 600 Index edged higher, though automakers slipped as German prosecutors brought market-manipulation charges against Volkswagen AG executives. Shares gained in Tokyo, Hong Kong and Shanghai, and were little changed in Sydney. The pound climbed after the U.K. Supreme Court said Prime Minister Boris Johnson’s suspension of Parliament was unlawful. Treasuries advanced while European bonds were mixed. Despite tensions easing between the U.S. and China, markets remain on edge ahead of planned high-level talks between the world’s two biggest economies in October. Underwhelming economic indicators are muddying the picture — downbeat numbers from Japan and mixed data from Germany were stark reminders of the fragility of global growth. And political risks loom large for investors, from Brexit to a U.S. Congressional investigation into President Donald Trump’s dealings with Ukraine. “All eyes are on early October, although there’s not a lot of expectation that anything material is going to come out from it,” John Lau, head of Asian equities at SEI Investments Co., said of the trade talks in an interview with Bloomberg Television. “If we get some kind of deal, any kind of deal, that would actually move markets.” Meanwhile, Federal Reserve Bank of St. Louis President James Bullard said the central bank may need to ease monetary policy further to offset downside risks from trade conflicts and too-low inflation. Not all policy makers are on the same page, though. People’s Bank of China Governor Yi Gang said the country isn’t in a rush to add massive monetary stimulus, while Francois Villeroy de Galhau admitted he opposed the ECB’s decision to restart quantitative easing. Australia’s central bank chief gave little indication that an interest-rate cut was in the immediate offing in a speech Tuesday. Elsewhere, oil fell on signs Saudi Arabia is making progress in restoring lost output following a drone attack on its facilities.”
Boris Johnson Urged to Resign Over Unlawful Suspension of Parliament
“U.K. Prime Minister Boris Johnson said he disagreed with the ruling of the country’s highest court that he broke the law by suspending Parliament for five weeks in the run-up to his Oct. 31 Brexit deadline — and promised to press ahead. n an unprecedented and sweeping rebuke to the premier, the Supreme Court’s 11 judges found Johnson had given Queen Elizabeth II “unlawful” advice to suspend the legislature — and that his decision had wrecked the ability of Britain’s elected politicians to fulfill their crucial democratic role. “Obviously this is a verdict that we will respect and we respect the judicial process,” Johnson said in a pooled interview in New York. “I have to say that I strongly disagree with what the justices have found. I don’t think that it’s right, but we will go ahead and of course Parliament will come back.” Johnson had argued he was right to halt the work of Parliament in order to bring forward a new lawmaking agenda for his government — but his critics accused him of attempting to deny members of Parliament a chance to stop him forcing the U.K. out of the EU without a deal next month. The judges struck down Johnson’s decision and told MPs to return to work immediately. Johnson was attending the United Nations General Assembly when the court decision was announced. He says he will fly back to London after giving his speech tonight in New York. The verdict marks an extraordinary constitutional moment and an unprecedented political crisis for the U.K. It blows a hole in Johnson’s political authority and calls into question his ability to remain in office as the Queen’s principal adviser. While the opposition was quick call for his resignation, Johnson shows little sign of wanting to go in that direction.”
China Gives New Waivers for Tariff-Free U.S. Soy Purchases
“The Chinese government has given new waivers to several domestic state and private companies to buy U.S. soybeans without being subject to retaliatory tariffs, according to people familiar with the situation. The companies received waivers for between 2 million to 3 million tons, said the people, who asked not to be identified as the information is private. Some firms already bought at least 20 cargoes, or about 1.2 million tons, from the U.S. Pacific Northwest on Monday, the people said. Among the companies are state-owned buyers Cofco and Sinograin as well as five other crushers, the people said. China’s commerce ministry didn’t respond to a fax seeking comment. The waivers follow a meeting between working level officials last week in the U.S. and before top negotiators meet next month to try to resolve the trade dispute. China’s commitment to buy more U.S. agricultural products is central to the talks, with President Donald Trump looking to shore up support from American farmers, an important political constituency in next year’s elections. Soybean futures traded in Chicago gained as much as 0.2% on Tuesday, erasing an earlier 0.2% decline. Soybean meal prices also reversed losses, adding 0.2%.”
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