Oct 12, 2018, by Lorcan Roche Kelly
The market rout that saw the S&P 500 Index enter its longest slide since 2016 and gauges in Asia and Europe plunge so far isn’t extending into a third day. Overnight, markets in Asia were boosted by robust China export figures with the MSCI Asia Pacific Index climbing 1.2 percent. In Europe, there is no repeat of yesterday’s drop, with the Stoxx 600 Index 0.5 percent higher by 5:50 a.m. Eastern Time. S&P 500 futures pointed to the recovery moving to U.S. stocks when markets open there.
The U.S. Treasury Department will not say that China is manipulating the value of the yuan when it publishes its twice-yearly report on currency regimes of trade partners next week, according to two people familiar with the matter. President Donald Trump has previously accused China – and the euro area – of FX manipulation, but it is Treasury Secretary Steven Mnuchin who gets the final word on whether Beijing is playing fair. The People’s Bank of China set today’s daily reference rate for the yuan at a weaker than expected level as the bank appears unconcerned about the prospect of reaching the 7 per dollar threshold.
JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. all report third-quarter earnings ahead of the open this morning. Lenders have been keeping a lid on expectations, so the bar may be quite low for a post-report rally. Loan growth will be one of the key metrics to watch, with investors on the look-out for any guidance on the shifting interest-rate environment in the U.S.
Turkey’s economic path could be forged by a court decision today on the fate of Andrew Brunson, a preacher from North Carolina, who is in custody over his alleged involvement in a 2016 coup attempt. The Trump administration said it is hopeful that he will be released, while Turkish President Recep Tayyip Erdogan said he has to abide by whatever the decision will be. Should the pastor be released, it would lift the threat of another round of U.S. sanctions against the country, however, a decision to press ahead with charges would likely send the lira into another dive.
U.S. import and export price data for September is due at 8:30 a.m., with the latest University of Michigan sentiment index at 10:00 a.m. Chicago Fed President Charles Evans and Atlanta Fed President Raphael Bostic are due to speak at separate events today. What has been a turbulent week for the oil market will be rounded off by the latest Baker Hughes rig count at 1:00 p.m.