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Good morning. Here’s what you need to know.
- Asian markets were mixed in overnight trading, with the Shanghai Composite down 0.71 per cent on concerns about the domestic economy. Europe is rallying and U.S. futures jumped after China announced its interest rate cut.
- China cut interest rates by 0.25 percentage points which will be effective June 8th on. Deposit and one-year lending rates were cut for the first time since 2008. China is letting banks offer 20 per cent discount from benchmark rate. Morgan Stanley: 6 signs that Chinese growth could be stabilizing >
- France sold €7.84 billion euros in debt at the top end of its €7 billion – €8 billion target range. French borrowing costs fell to a decade low.
- Meanwhile, Spain sold €2.07 billion in debt exceeding its €2 billion target. 10-year bond yields climbed to 6.04 per cent, but were below the 6.12 per cent at which existing 10 year debt was trading before the auction. The intraday yields on the 10-year Spanish bond fell sharply after the auction. Now here are 14 reasons Spain is turning into a disaster >
- In industry news, Vodafone and Telefonica have agreed to a 50-50 mobile phone venture to reduce costs as competition picks up. Samsung Electronics has named Kwon Oh Hyun as the company’s new CEO. Kwon and his team led the company out of a downturn in the industry.
- Microsoft isn’t letting HTC build an ARM-based Windows tablet. This will be a blow to HTC’s revenue after the company already reduced its Q2 sales forecast by 13 per cent.
- The Bank of England left its interest rates steady at 0.5 per cent and kept its asset-purchase program unchanged.
- Initial jobless claims fell to 377K beating expectations of a drop to 379K new claims >
- Federal Reserve Chairman Ben Bernanke will testify before the Joint Economic Committee on the economic outlook in Washington at 10 a.m. ET. Now here’s the full presentation where Janet Yellen makes the case for more QE >
- UK services PMI stayed at 53.3 in May, against expectations of a drop to 52.4. Meanwhile, UK home prices increased by 0.5 per cent in May, after a 2.3 per cent decline the previous month.
- Bonus – Charlize Theron said she once agreed to be auctioned off for a charity date but the experience was scary.