Good morning! Here’s what you need to know in markets on Friday.
Bank of England governor Mark Carney says that the central bank will likely have to engage in a further programme of quantitative easing over the summer, as a response to the UK’s vote to leave the European Union last week. But, more importantly, he warned that there are “limits” to what the BoE can do to address the economic problems that will be caused by Brexit.
The pound dived overnight on Carney’s comments but is stable again. Sterling is up 0.04% against the dollar to 1.3316 at the time of writing (6.20 a.m. BST/1.20 a.m. ET).
Credit rating agency Standard and Poor’s has cut its rating for the European Union’s debt from AA+ to AA. The agency cited the United Kingdom’s decision to exit the organisation and a possible cascading effect from the vote as the primary reasons for the downgrade.
Growth in China’s manufacturing sector stalled in June, an official survey showed on Friday, adding to expectations that Beijing will have to roll out more stimulus soon to boost the sluggish economy. The official Purchasing Managers’ Index (PMI) eased to 50.0 in June, compared with 50.1 in May and right at the 50-point mark that separates growth from contraction on a monthly basis.
European manufacturing figures are coming. Between 8.45 a.m. BST (3.45 a.m. ET) and 9.30 a.m. BST (4.30 a.m. ET) preliminary manufacturing PMI numbers for June are due for Italy, France, Germany, Greece, Britain, and the European Union as a whole. The UK is expected to see a slight acceleration on its stagnant growth while the eurozone’s manufacturing growth is expected to remain steady at 52.6, the same rate it grew at in May.
US stocks soared for a third straight day and continued to advance towards the levels they topped at before the shocking Brexit vote sent markets spiraling down a week ago. The S&P 500 ended the second quarter with a 1.9% gain, as it extended its gains for the year above 2.6%. But the Nasdaq finished red for the quarter and is still down year-to-date.
Asian shares rose overnight. Japan’s Nikkei is up 0.48% at the time of writing (6.20 a.m. BST/1.20 a.m. ET), China’s benchmark Shanghai Composite is up 0.07%, and the Hong Kong Hang Seng is up 1.75%.
Rupert Murdoch’s UK newspaper group has mounted a major challenge to BBC radio with a £220 million ($293 million) takeover of Wireless Group, the owner of the Premier League football broadcaster talkSport. The Telegraph reports that Wireless Group, which also owns Virgin Radio and a string of local radio stations around the UK and Ireland, recommended an offer from News UK of 315p per share, a 70% premium on yesterday’s closing price.
Senior Goldman Sachs managers encouraged a former salesman to “own” the Libyan Investment Authority as a client because of the potential for large profit margins on complex trades, a London court heard on Thursday. The LIA was set up in 2006 to invest Libya’s oil wealth internationally. The organisation claims Goldman Sachs took advantage of the low level of financial literacy of LIA staff and suggested large and risky trades that led to heavy losses for it and profits for the bank.
BHP Billiton on Friday said it would appeal against the decision by a Brazilian court to reinstate a $6 billion (£4.5 billion) public civil claim over last year’s Samarco iron ore mine disaster. BHP and 50-50 joint-venture partner Vale had agreed on a $2.3 billion (£1.7 billion) settlement in March, but Brazil’s Superior Court has responded to an appeal from the Federal Prosecutor’s Office by issuing an interim order suspending its ratification.