Stock Market News Today 2018/08/17
Eurozone consumer inflation
The EU’s financial services chief has warned that the bloc’s flagship project to boost private sector investment in business is in jeopardy, with governments lagging in approving the necessary laws.
Valdis Dombrovskis, the European Commission vice-president responsible for the euro, said the EU’s goal of creating a capital markets union by 2019 might not be reached.
The CMU project aims to harmonise procedures within the bloc to improve cross-border investment, which has been held back for years despite EU treaties that guarantee free movement of capital. But legislation underpinning parts of the project has been delayed, including simplified bankruptcy proceedings, the development of pan-European pension funds and the creation of a cross-border market in covered bonds.
In markets on Friday, stocks in Asia gained ground as concerns from earlier in the week over Turkey’s economy and the US-China trade war continued to subside. The Turkish lira was slightly weaker while the Australian dollar gained on comments from the country’s central bank governor and gold was poised for its worst week since mid-2017.
Futures tipped the FTSE 100 to slip 0.1 per cent and the S&P 500 to drop 0.3 per cent.
Corporate announcements slated for Friday include GKN, UBM and Amec Foster Wheeler. The economic calendar is fighting in the cruiserweight division (all times London):
09.00: eurozone current account balance
10.00: eurozone July consumer price index (final reading)
Gold on track for worst week in 15 months
The price of gold was tracking for its biggest weekly fall since May 2017 on Friday, as the precious metal continued to face selling pressure from the rising dollar.
Gold on Thursday touched $1,159.96 an ounce, according to Reuters data, its lowest since January 2017 and down 15 per cent from its best intraday price this year of $1,366.069, reached on January 25.
Amid widespread market volatility in recent weeks, especially in emerging markets, investors have “sought safety” in the dollar, ANZ analysts noted.
The lower price has hit gold-focused stocks, with the ASX All Ordinaries Gold index now down nearly 12 per cent this quarter.
And “short selling on the precious metals markets continues to surprise, given the already large short position on many precious metals, including gold, platinum,” Société Générale analysts said in a research note, adding also that money managers had “opened new short positions worth $2.8bn – the eighth consecutive week of new short inflows.”
Gold was trading up 0.4 per cent in early Asia-Pacific trading on Friday, at $1,1178 an ounce, but was still on track for a one-week decline of nearly 3 per cent. While the dollar index, measuring the greenback against a basket of peers, was off 0.1 per cent.
But investors “are likely to remain edgy” on commodity prices “despite prices rebounding strongly following the rout earlier this week”, ANZ said.
Malaysian central bank liberalises FX policy
Bank Negara Malaysia on Friday announced regulatory reform aimed at easing exporters’ foreign exchange management risk and at opening up Malaysia’s capital markets further to international investors.
The move is in sharp contrast to the previous central bank administration led by Muhammad Ibrahim, who had taken a tougher approach to international financial institutions and quit mere days after Mahathir Mohamad ousted Najib Razak in the May elections.
Nor Shamsiah Mohd Yunus, current central bank governor, said at her debut press conference that the new measures “will reduce the administrative burden faced by exporters”, which as per regulation introduced by Mr Muhammad in 2016, had to convert foreign exchange to ringgit and back again to honour obligations in foreign currency.
Now, they will be able to “automatically sweep” foreign currency export proceeds with onshore banks.
The central bank will also allow international companies to trade in ringgit denominated interest rate derivatives via Malaysian banks’ overseas subsidiaries appointed by Bank Negara – a transaction that was previously prohibited.
Under the new framework, Malaysian residents will also be able to hedge foreign currency exposures on obligations beyond six months and on invoices issued in foreign currency for domestic trade of goods and services.
“Financial markets will be much more volatile …Corporates and exporters will need more flexibility” to manage their foreign currency exposures, said Nor Shamsiah.
Elon Musk describes ‘excruciating’ year at Tesla
Musk lamented the toll his work schedule has taken on his life. Elon Musk has described an “excruciating” year of work at Tesla that has weighed deeply on his personal life and health but vowed to remain chairman and chief executive of the company he founded, in his first interview since he tweeted about taking private.
After more than a week of intense scrutiny, Mr Musk told the New York Times that no one else had seen or reviewed his tweet about in which he said “funding secured” before he posted it, adding that he had not received complaints from Tesla’s board.
“I don’t recall getting any communications from the board at all,” he said. “I definitely did not get calls from irate directors.”
An emotional Mr Musk lamented the toll his round-the-clock work schedule has taken on his life, describing 120-hour work weeks, days spent inside his factory and reduced contact with his children and friends.
“The worst is over from a Tesla operational standpoint,” he said. “But from a personal pain standpoint, the worst is yet to come.”
He acknowledged the board had explored recruiting a deputy to take on some of his responsibilities but was adamant that he would remain in his job.
“If you have anyone who can do a better job, please let me know. They can have the job. Is there someone who can do the job better? They can have the reins right now,” he said.
Mr Musk also took another shot at short sellers.
“They’re not dumb guys, but they’re not supersmart. They’re O.K. They’re smartish,” he said. He expected “at least a few months of extreme torture from the short-sellers, who are desperately pushing a narrative that will possibly result in Tesla’s destruction.”