June 20, 2017
Dovish Carney hits the pound, former Barclays executives charged, and it’s MSCI decision day for China shares. Here are some of the things people in markets are talking about today.
The pound was trading at $1.2693 at 5:13 a.m. Eastern Time, the lowest level since the Bank of England’s surprise split decision on monetary policy last week, after Governor Mark Carney said this morning that Brexit worries mean he is in no rush to tighten policy. U.K. Chancellor of the Exchequer Philip Hammond, speaking at his delayed Mansion House speech this morning, put protecting financial services at the heart of his plan for Brexit. The negotiations for the U.K. to leave the European Union kicked off yesterday with little fuss as the British team agreed to the EU’s timetable for talks, which leaves any trade deal discussion until after the terms of exit are agreed. Investor George Soros warned that the country is approaching a “tipping point,” calling Brexit a lose-lose proposition.
The U.K. Serious Fraud Office said that Barclays Plc and four former executives, including former Chief Executive Officer John Varley, have been charged with conspiracy to commit fraud in relation to the bank’s 2008 capital raising from Qatar. The case relates to fees Barclays paid to the Qatar Investment Authority and a $3 billion loan facility it made available to the nation while the bank raised 12 billion pounds ($15 billion) from Qatari and other investors. Shares in the bank, which had expected charges related to disclosure failures, were down 0.2 percent by 5:30 a.m.
In what has become something of an annual event for Chinese investors, MSCI Inc. will announce whether it is has decided to include China’s domestic stocks in its benchmark share indexes after New York markets close today. Analysts see this as the best chance of the country’s shares making the cut for MSCI, as the number of listed companies that are considered for inclusion has been cut significantly since last year. China’s domestic stock markets have underperformed global benchmarks this year, having a negative correlation with the MSCI All-Country World Index in recent months.
Overnight, the MSCI Asia Pacific Index advanced 0.1 percent, close to a 2017 high, while Japan’s Topix index added 0.7 percent as the yen weakened. In Europe, the Stoxx 600 Index was 0.2 percent higher as a recovery in technology stocks lifted the broader index. U.S. stock futures pointed to a higher open.
The dollar rose as Federal Reserve speakers talked up the strength of the U.S. economy, with New York Fed President William Dudley saying he was confident the expansion had a long way to go, while Chicago Fed President Charles Evans said that fundamentals look good. Evans did strike a more dovish tone, saying the current environment supports very gradual rate hikes. The bond market is showing signs that it thinks the Fed is done raising rates until December.