Good morning! At the start of a new week, here are the major stories likely to have an impact as markets open.
Russia Is Losing $US140 Billion Per Year. “We are losing around $US40 billion per year due to geopolitical sanctions and we are losing some $US90 to $US100 billion per year due to oil prices falling 30 per cent,” Russian Finance Minister Anton Siluanov said Monday. Western economies including the US and EU have imposed sanctions on Russia over the conflict in Ukraine.
It’s The Deadline For A Deal With Iran. Time runs out Monday for the biggest chance in years to resolve the Iranian nuclear standoff, as Tehran and world powers make a final push for a deal but with a risky extension looking likely.
German Business Confidence Bounces. Germany’s IFO institute business climate index unexpectedly jumped to 104.7 in November from 103.2 a month ago. This was better than the 103.0 expected by economists. This is good news as Germany is the largest economy in Europe.
But Let’s Not Get Too Excited … “Given the surprising weakness in the manufacturing PMI last week, though, it is still too early to conclude that sentiment is pointing to an upturn in activity, but we are seeing signs that the economy is, at least, no longer deteriorating,” Pantheon Macroeconomics’ Claus Vistesen said of the IFO report. “The rise in the headline index marked the first gain in seven months, but the overall trend of the key components in the IFO survey is still consistent with a weak economy. The conflict with Russia continues to weigh on business sentiment, and the expansion in the manufacturing sector is still subdued.”
Markets Are Up Again. US futures are up with Dow futures up 28 points and S&P futures up 4 points. Asian markets closed up, with Japan’s Nikkei climbing 0.3% and Hong Kong’s Hang Seng jumping 1.9%. Europe is modestly higher with France’s CAC 40 up 0.7%, Germany’s DAX is up 0.6%, and Spain’s IBEX is up 1.0%.
Light Economic Data. At 9:45 a.m. ET, we’ll get the Markit US Services PMI report. Economists forecast a 57.3 print, up from 57.1 a month ago. At 10:30 a.m. ET, we’ll get the Dallas Fed Manufacturing Activity index. Economists are expecting the index to fall to 9.0 from 10.5 a month ago.
China Is Getting Ready To Cut Rates Again. “China’s leadership and central bank are ready to cut interest rates again and also loosen lending restrictions, concerned that falling prices could trigger a surge in debt defaults, business failures and job losses, said sources involved in policy-making,” Reuters’ Kevin Yao said. “Friday’s surprise cut in rates, the first in more than two years, reflects a change of course by Beijing and the central bank, which had persisted with modest stimulus measures before finally deciding last week that a bold monetary policy step was required to stabilise the world’s second-largest economy.”
$US60 Oil? “Oil prices could plunge to $US60 a barrel if OPEC does not agree a significant output cut when it meets in Vienna this week, market players say,” Reuters’ Claire Milhench reported. “Brent crude futures have fallen 34 per cent since June to touch a four-year low of $US76.76 a barrel on Nov. 14, and could tumble further if OPEC does not agree to cut at least 1 million barrels per day (bpd), commodity fund managers say.”
Italy’s Intesa May Buy Coutts. Italy’s retail bank Intesa SanPaolo is looking at a possible bid for Coutts International, the wealth management arm of Royal Bank of Scotland, the Financial Times reported.
Barron’s Likes Intel. According to the new print edition of Barron’s, Intel has 30% upside. “As elevated capital spending reverts to ordinary levels, the result should be swelling free cash flow and more dividend increases like the one announced Thursday,” Barron’s Jack Hough writes. “Shares look likely to rise over 30%, to $US48, over the next two years.”
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