Good morning! Here’s what you need to know in markets on Monday.
Uber China, the regional subsidiary of the car-hailing app juggernaut, is merging with Didi Chuxing — its biggest rival in the country — in a $35 billion (£26.4 billion) mega-merger, reports Bloomberg’s Eric Newcomer.Newcomer cites details taken from a blog post by Uber CEO Travis Kalanick, obtained by Bloomberg ahead of official announcement of the deal. That announcement will reportedly be made on Monday, August 1.
Tesla Motors and SolarCity could announce they have agreed to merge as early as Monday, according to people familiar with the matter. While billionaire Elon Musk is chief executive of Tesla, chairman of SolarCity, and the biggest shareholder in both companies, a merger agreement is not certain because SolarCity formed a special committee to review Tesla’s offer independent of the influence of Musk and other executives close to him.
Factories in China and Japan – the world’s second and third-largest economies – saw scant sign of demand recovering in July, with surveys across Asia offering only crumbs of comfort after weak growth readings in the United States and Europe. Among the slew of surveys out on Monday, China’s official Purchasing Managers’ Index (PMI) slipped to 49.9 in July, inching below the 50 mark that is supposed to separate growth from contraction.
China’s stock markets are diving after the manufacturing numbers. China’s benchmark Shanghai Composite is down 1.19% at the time of writing (6.35 a.m. GMT/1.35 a.m. ET). Japan’s Nikkei is up 0.23%, buoyed by renewed stimulus hopes, and the Hong Kong Hang Seng is up 1.29%.
The Bank of England will slash its UK growth forecasts this week as policymakers unveil a package of stimulus measures designed to shore up the economy after the Brexit vote. The Telegraph reports that investors believe an interest rate cut is certain, with most analysts expecting rates to be trimmed to 0.25%, from the current record low of 0.5%.
European factory data is coming. It’s July manufacturing PMI day, meaning we’ll get readings for factory activity in Spain, Italy, France, Germany, Greece, the UK, and the eurozone as a whole from 8.15 a.m. GMT (3.15 a.m. ET) onwards. Eurozone manufacturing growth is expected to hold steady at 51.9, while the decline in UK manufacturing is expected to slow, rising to 49.6 from 49.1 in June. (Anything above 50 signals growth, anything below contraction.)
High-profile British Treasury Minister Jim O’Neill, a former Goldman Sachs chief economist, could quit his post over Prime Minister Theresa May’s new approach to Chinese investment, the Financial Times reported, citing a friend of O’Neill. May intervened personally last week to delay the final decision on a partly-Chinese funded nuclear power project, a source said on Saturday, while a former colleague said May had previously expressed concern about the national security implications of the planned Chinese investment.
Ride-hailing service Uber has decided to invest $500 million (£377.4 million) into an ambitious global mapping project to wean itself off dependence on Google Maps and pave the way for driverless cars, the Financial Times reported on Sunday. The San Francisco-based company is ramping up spending in new technologies such as mapping and driverless cars following new investments into the company earlier this year.
British fintech startups have announced at least £40 million ($52.9 million) of investment in just over a month since the referendum on the UK’s membership of the European Union, according to an analysis by Business Insider.Nine funding deals in the fintech sector totaling £40.6 million ($53.7 million) have been announced since June 23, when Britain shocked the world by voting to leave the European Union.
Business loans in the UK will shrink to the lowest in more than a decade in the next couple of years as weaker economic prospects in the aftermath of the vote to leave the European Union dampen demand, according to the EY ITEM Club. Bloomberg reports that the organisation said in a report released on Monday that total lending to companies will contract 1.8% next year and another 1% in 2018 before finally recovering the following year.
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