Good morning! Here’s what you need to know in markets on Monday.
Federal Reserve chairman Janet Yellen will address the United States congress on Wednesday. Yellen will spend much of Wednesday on Capitol Hill, as part of her semi-annual testimony, where she will read a set of prepared remarks before answering questions. She is expected to discuss her updated thinking on the economy and the rationale behind the FOMC’s decision to raise interest rates in December.
Australian stocks officially entered a bear market overnight. The ASX 200 was more than 20% from its high of 5996.9 on March 3 last year. The index crashed below the key 4800 point level, for the first time since July 2013, after losing 2.88% yesterday in a global avalanche.
HSBC is being sued for allegedly allowing drug cartels to launder money. According to Reuters, the bank has been sued by the families of U.S. citizens murdered by drug gangs in Mexico, claiming it let cartels launder billions of dollars to operate their business.
The EU is investigating the alleged fixing of the $1.5 trillion government-sponsored debt market. The Financial Times reports that the European Commission has sent questionnaires to various participants in the European markets, as part of a preliminary investigation into the potential manipulation of the price of supranational, subsovereign and agency debt, known as the SSA market.
Deutsche Bank is “absolutely rock-solid,” according to co-CEO John Cryan. In an all-staff memo sent on Tuesday, new boss Cryan told employees at the bank that things are going just fine and that market prices indicating stress at Deutsche are misreading the company. Cryan’s comments come amid reports that Deutsche is planning a multi-billion bond buyback scheme.
Japanese stocks have fallen by more than 20% since December. The Nikkei 225 fell as much as 2.4% during trading on Wednesday, adding to 5.4% losses witnessed in the previous session. The index now sits at the lowest level since October 31, 2014, extending its losses from early December last year to more than 20%.
The European Union faces “critical times” and is in bad shape, according to founding members. The foreign ministers of Germany, France, Italy, Belgium, Luxembourg and the Netherlands met in Rome on Tuesday, and issued a joint statement saying that the EU’s joint goals are in jeopardy, thanks to divisions over the handling of the migrant crisis.
Japanese brewer Asahi is reportedly trying to buy two European breweries. Japan’s Asahi Group Holdings has offered $3.5 billion (£2.4 billion) to buy Italy’s Peroni and the Dutch beer Grolsch from British giant SABMiller, in what would be the biggest-ever overseas acquisition by a Japanese beer company, a report said Wednesday.
There are growing fears that Venezuela may default — as a result of continuing low oil prices. Economist Albert Ades said that if Brent oil prices level off at $25, Venezuelan GDP would hit $80 billion, making its external debt of $123 billion unpayable.
The global market for negative yielding government debt has now passed $6 trillion. According to JP Morgan’s Global Bond Index, that number
has more than doubled in just over a month, and now exceeds 25% of all debt tracked. Investors are flooding cash into safe assets, as volatilty grips global markets.
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