Good morning! Here’s what you need to know in markets on Tuesday.
1. Theresa May has signed a £1.5 billion deal with Northern Ireland’s Democratic Unionist Party in order to prop up her minority Conservative government, the BBC reports. The deal, which comes two weeks after the election resulted in a hung Parliament, will see the 10 DUP MPs back the Tories in key Commons votes.
2. The threat of a global trade war was growing last night after the European Union promised to retaliate if the Continent’s producers became “collateral damage” in measures to protect the American steel industry by classifying it as a matter of national security, the Times reports.
3. New data show consumer confidence has slumped in the wake of the UK’s hung parliament, and is only marginally higher than it was in the immediate aftermath of the UK’s vote to leave the European Union. The latest Consumer Confidence Index results show consumer confidence fell from 109.1 in the week before the election to 105.2 in the week afterwards.
4. The price of gold tumbled yesterday after a huge spike in New York futures volumes that traders attributed to an inadvertent “fat-finger” order, the Times reports. The sale of 18,500 lots of gold, totalling 1.85 million ounces, in only a minute sent the price falling by as much as 1.6% to $US1,236.43 an ounce, the lowest since the middle of last month.
5. The sale of the Co-operative Bank has been scrapped as bailout talks with the troubled lender’s backers intensify, the Times reports. The hedge funds that own 80% of the bank are in talks with the Co-operative Group, the minority shareholder, over splitting the Co-op Group’s pension scheme, which had proved an obstacle for the bank’s sale.
6. Japan’s Nikkei share average edged up to hover near two-year highs on Tuesday morning as a weaker yen helped exporters rise, while financial stocks rebounded from Monday’s declines, Reuters reports. The Nikkei gained 0.4% to 20,233.23 in midmorning trade after hitting as high as 20,250.10 earlier. MSCI’s broadest index of Asia-Pacific shares outside Japan stood flat.
7. Crude oil futures were largely unchanged in early Asian trade on Tuesday as the market took a breather following three days of gains with a supply glut keeping a lid on prices, Reuters reports. U.S. West Texas Intermediate (WTI) crude futures were down 2 cents at $US43.36 per barrel by 1.19 a.m. BST (8.19 p.m. Monday ET) and Brent crude futures were flat at $US45.83 per barrel.
8. The euro retraced its Monday gains after ECB’s Draghi defended the central bank’s easy monetary policy, Reuters reports. Draghi said on Monday that super low rates create jobs, foster growth and benefit borrowers, ultimately easing inequality. He also rejected calls to exit super easy monetary policy quickly, arguing that premature tightening would lead to a fresh recession and more inequality.
9. Cryptocurrency Bitcoin had a rough start to the week It’s a rough start to the week for bitcoin. The cryptocurrency trades down 10.11% on Monday, at $US2,275 a coin, a one-week low. The action seems to be a continuation of the selling that developed on Wednesday, when rival Ethereum flash-crashed from $US296 to 10 cents before recovering its losses.
10. Bank of England governor Mark Carney delivers the central bank’s twice-yearly Financial Stability Report today. It covers an assessment of the strengths and weaknesses of the financial system and the risks to stability, and the Financial Policy Committee’s view on the outlook for the stability of the UK financial system.