Good morning! Here’s what you need to know in markets on Wednesday.
Donald Trump Jr. on Tuesday released what he said was the full email chain between him and the music publicist believed to have helped arrange a June 2016 meeting with a Russian attorney in which Trump Jr. was hoping to get dirt on Hillary Clinton. In a statement on Twitter, Trump said he was releasing the emails “in order to be totally transparent” about the situation, first revealed this past weekend by The New York Times.
Global markets on Tuesday got a taste of the volatility for which it has been so starved. After drifting along innocuously for much of the morning, stocks were rocked by Trump Jr.’s email release, before recovering almost instantly. The sharp reaction showed that stocks aren’t yet immune to politics, although they have increasingly looked numb to recent shocking headlines.
Apple has set up its first data center in China, in partnership with a local internet services company, to comply with tougher cybersecurity laws introduced by Beijing last month, it said on Wednesday. The U.S. company said it was setting up the facility in the southern province of Guizhou with data management firm Guizhou-Cloud Big Data Industry Co Ltd (GCBD).
Oil prices on Wednesday extended gains from the previous day as the U.S. government cut its crude production outlook for next year and as fuel inventories plunged. By 6.50 a.m. BST, Brent crude futures rose 80 cents, or 1.66% to $US48.31 per barrel, while U.S. West Texas Intermediate (WTI) crude futures were at $US45.91 per barrel, up 85 cents, or 1.9%.
Asian shares steadied on Wednesday after Wall Street managed to weather a fresh twist in the political controversy surrounding U.S. President Donald Trump’s administration, while investors looked ahead to Federal Reserve Chair Janet Yellen’s comments later in the day. “Yellen’s testimony is the biggest focus. I don’t expect shares to move much in either direction ahead of that,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities.
The Treasury Select Committee — one of the most important bodies in scrutinising the actions of the Treasury, the Bank of England, and the broader UK financial services sector — will get a new leader on Wednesday. MPs in the House of Commons will vote for their new leader from six Conservative Party candidates, with former Education Secretary Nicky Morgan, and eccentric backbencher Jacob Rees-Mogg the favourites.
The latest figures on the UK’s labour markets will be released later on Wednesday morning. At 9.30 a.m. BST, the Office for National Statistics will release figures for unemployment and employment rates, as well as wage growth during June. The figures will be closely watched to see if the squeeze in living standards being driven by Brexit-related inflation intensified last month.
European stocks have been on a tear in recent months, rallying hard on the back of reduced political risks and strong economic data, making assets across the region more attractive than most. However, the golden run for European stocks is about to come to an end, says Deutsche Bank’s equity strategy team, noting that after 15 consecutive weeks of net inflows to the region, the longest stretch since late 2015, investors began to sell last week following a shift in rhetoric from several leading European Central Bank officials.
Ben Broadbent, the Bank of England’s deputy governor for monetary policy, and of its most important policymakers, summed up in one sentence the risks to the economy posed by Brexit. Speaking on a regional visit to the Scottish city of Aberdeen, Broadbent argued that should Brexit lead to a “significant curtailment” of Britain and the EU’s trading relationship, both parties would see significant damage.
Major banks, insurers, and other financial services firms are favouring Dublin ahead of other EU hubs for post-Brexit relocation, a report from professional services giant EY says. EY’s UK Attractiveness for Financial Services Investors report shows that of the 222 financial services companies it monitors, 59 have so far made statements about moving some staff or establishing a new entity within the EU after Brexit. 19 have mentioned moving to Dublin, or Ireland more generally, making it the most popular relocation location. Frankfurt is a close second, with 18 mentioning Frankfurt or Germany.