Good morning, and welcome to the first “10 things you need to know in markets today” of 2017! Here’s what you need to know on Tuesday.
Economists are increasingly “gloomy” about the UK’s prospects in 2017, according to an annual survey released by the Financial Times. “Growth will slow markedly in 2017, household incomes will be squeezed by higher inflation and businesses will hold back on investment decisions because of uncertainty about Brexit,” economists polled by the newspaper expect.
US President-elect Donald Trump says he won’t let failed state North Korea drop a nuclear bomb on America. In his now trademark diplomacy-by-tweet, Trump said: “North Korea just stated that it is in the final stages of developing a nuclear weapon capable of reaching parts of the U.S. It won’t happen!”
U.S. oil prices rose in the first trading hours of 2017 on Tuesday, buoyed by a deal for OPEC and non-OPEC production cuts which kicked off on Sunday. January 1 marked the official start of the deal agreed by the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC member countries such as Russia in November last year to reduce output by almost 1.8 million barrels per day. Around 6.40 a.m. GMT (1.40 a.m. ET) both major benchmarks are up roughly 0.55%, with US WTI crude at $54.03 per barrel, and Brent crude, the international mark, at $57.15.
The OECD is warning of a global property market crash thanks to “dangerous” conditions. OECD chief economist Catherine Mann told the Telegraph that it is monitoring “vulnerabilities in asset markets” and warned that prices for both commercial and residential real estate in some nations, including Sweden and Canada, are “not consistent with a stable real estate market.”
The boss of one of the world’s largest accountancy firms thinks China is “a lot more bullish” than press reports make it out to be and he sees it as a major growth area for 2017. KPMG global chairman John Veihmeyer told Business Insider in an interview that China, along with a number of other emerging markets, is seeing a flow of outbound investment from the region despite reports of an economic slowdown.
Activity levels for smaller Chinese manufacturers improved sharply in December, expanding at the fastest pace seen in nearly four years. The Caixin-Markit manufacturing purchasing managers index (PMI) rose by 1 point to 51.9, leaving the index at the highest level seen since January 2013. The PMI measures changes in activity levels for small and medium-sized Chinese manufacturing firms from one month to the next.
Finland just launched an experiment giving 2,000 people free money until 2019. Starting January 1, 2017 and lasting until 2019, the federal social security institution Kela will distribute roughly $590 each month to 2,000 jobless Finns. Regardless of whether they find work during that period, the money will keep coming in at the beginning of each month — a trial version of basic income, one of the past year’s most popular theories of how to solve poverty.
Iceland could hold a referendum on joining the EU if new negotiations on forming a coalition government are successful, the head of one of the three parties involved in the talks said Monday. Bright Future leader Ottarr Proppe said new talks launched Monday have been more successful on the long-disputed issues of fishing and EU membership. “We have reached a certain settlement on ideas, including this one,” Proppe told public broadcaster RUV, referring to holding a referendum on whether the Nordic nation should resume its stalled EU accession process.
Investors funneled $375 billion into exchange-traded funds in 2016, investment manager BlackRock said on Tuesday, a global record that came as investors looked to cut costs. The total, which is preliminary, compares with $348 billion in 2015 and includes a record $286 billion haul in the United States, home to the funds’ biggest market. ETFs are a basket of stocks or other assets traded by individual investors and institutions. Fund managers from BlackRock to Vanguard and Schwab offer index ETFs that try to track, not beat, the market.
Deutsche Bank’s former CEO has joined investment firm Cantor Fitzgerald as president. According to Bloomberg, ex-DB boss Anshu Jain will help the “company expand in areas including fixed-income and equities trading as well as prime brokerage.” In a statement, Jain said: “As a leading non-bank financial institution, with cutting-edge technology and a global reach, Cantor is well-positioned to capitalise on the changing financial landscape.”