Good morning! Here’s what you need to know in markets on Tuesday.
Federal Reserve Chair Janet Yellen made her final speech before the Fed’s June 15 policy announcement. In her speech, titled “Current Conditions and the Outlook for the US Economy,” Yellen says that right now the positives in the economy outweigh the negatives.
Asian shares hit a five-week high overnight after Yellen’s comments, which were taken as a sign that interest rate rises are likely on the way. The Nikkei is up 0.62% at the time of writing (6.25 a.m. BST/1.25 a.m. ET), while China’s Shanghai Composite is up 0.02%, and the Hong Kong Hang Seng is up 0.86%.
The “Remain” campaign has a slim lead in the latest poll ahead of the EU referendum later this month. British support for remaining in the European Union stands at 48% compared to 47% of voters who back leaving the 28-member bloc, a poll for the Daily Telegraph newspaper showed late on Monday. Sterling spiked in early morning trade on Tuesday and is up 0.48% against the dollar to 1.4513 at the time of writing (6.25 a.m. BST/1.25 a.m. ET).
Sports Direct billionaire Mike Ashley will be grilled by MPs this morning about working conditions at his warehouses. The Sports Direct chairman will appear before the House of Commons Business, Innovations, and Skills Select Committee at 10.00 a.m. BST (5.00 a.m. ET), after reversing an earlier decision not to come. The Financial Times reports that Sports Direct’s CEO has also announced he will forgo his multimillion-pound share award bonus this year. You can watch the full Sports Direct hearing here.
European GDP numbers are coming. Updated figures for first quarter GDP growth across the eurozone are expected at 10.00 a.m. BST (5.00 a.m. ET). Economists are forecasting quarterly growth of 0.5% and an annual growth figure of 1.5%.
Morgan Stanley has asked securities regulators for the right to launch its first US-listed exchange-traded funds, marking the latest example of a massive Wall Street investment manager courting investors’ growing use of those funds. The company’s asset management unit asked the US Securities and Exchange Commission for permission to launch “passive” ETFs that would mimic market indexes as well as “actively managed” ETFs, which allow portfolio managers to pick a set of stocks and bonds they expect to beat the market.
Goldman Sachs netted a big profit in one of its most promising businesses. The investment bank took minority stakes in prominent hedge funds, including Winton Capital and Capula Investment Management, through its Petershill I fund in 2007. Goldman said Monday in a letter to investors in Petershill that it is selling the minority stakes to Affiliated Managers Group, and expects a two-and-a-half gross return on its investment.
Verizon plans to submit a second-round bid of around $3 billion (£2 billion) for Yahoo’s core internet business, the Wall Street Journal reported, citing people familiar with the matter. Private-equity firm TPG was also expected to submit a second round bid for the assets before Monday’s deadline, the newspaper reported.
Saudi Arabia plans to cut public-sector wages as well as subsidies by 2020, scaling back the state largess that helped ensure political loyalty in the largest Arab economy. Bloomberg reports that the Saudi cabinet approved the National Transformation Program, part of the Vision 2030 plan unveiled by Deputy Crown Prince Mohammed bin Salman in April. Its targets include reducing public-sector wages to 40% of spending by 2020, from 45% today. Public debt is seen climbing to 30% of economic output from 7.7% currently.
US law enforcement officials are attempting to identify whether Goldman Sachs violated federal law, after failing to flag a transaction in Malaysia, the Wall Street Journal reported, citing people it said were familiar with the investigation.The probe concerns $3 billion (£2 billion) raised by Goldman Sachs through a bond issue for Malaysian state investor 1Malaysia Development Bhd (1MDB). The focal point is whether the bank complied with the Bank Secrecy Act, the main US anti-money laundering law.