Here is what you need to know.
The Bank of Japan said its buying more ETFs. At Friday’s meeting, the Bank of Japan kept the size of its quantitative easing program unchanged at around ¥80 trillion per year, but said it would increase its ETF ad REIT purchases and extended the maturities on its bond purchases. The BOJ will “purchase exchange-traded funds (ETF’s) and Japan real estate investment trusts (J-Reits) so that their amounts outstanding will increase at annual paces of about 3 trillion yen and about 3.2 trillion yen respectively.” In addition, the central bank will extend the maturities on its Japanese Government Bond purchases from 7-10 years to 7-12 years from the beginning of 2016. The changes came at a vote of 6 to 3. The Japanese yen is stronger by 1.1% at 121.81 per dollar.
Spain is going to the polls. Spain’s general election takes place on Sunday. Prime minister Mariano Rajoy’s Popular Party is expected to lose its majority despite a rebound in the Spanish economy as unemployment remains high. The Podemos Party, has been compared to Greece’s Syriza party, is expected to pick up the most seats in the election, says Marc Chandler of Brown Brothers Harriman. Spain’s 10-year yield is down 5 basis points at 1.68%.
Chinese home prices rose. China’s National Bureau of Statistics says home prices in China’s 70 largest cities rose 0.9% year-over-year in November, improving from the 0.1% YoY gain in October. Prices in Beijing (+7.7%), Shanghai (+13.1%) and Shenzhen (+43.9%) saw strong YoY gains. The 0.3% month-over-month advance was good for a seventh straight monthly gain. China’s yuan ended little changed at 6.4811 per dollar, and remains near its weakest levels since July 2011.
Ukraine defaulted on its bond payment to Russia. Ukraine missed the Sunday deadline for its $3 billion bond payment to Russia. The default comes after Russia refused to participate in a restructuring of Ukraine’s debt earlier this year, saying it should receive more favourable terms as a sovereign lender. Bloomberg says, “Kiev’s government is barred from paying Russia back in full under the conditions of the restructuring agreement with private creditors and a $17.5 billion IMF aid package secured this year to keep the country’s economy afloat.”
Crude oil is plunging. West Texas Intermediate is down another 1.2% this morning, at $34.53 per barrel. Recent selling has dropped the energy component to levels last seen in February 2009.
Apple Pay is going to China. Apple says it will team up with China UnionPay to bring its Apple Pay product to China in 2016. China UnionPay operates the interbank clearing and settlement system in China, and says it has 5 billion credit cards in circulation and 6 million vendors. The deal must still be cleared by Chinese regulators.
GlaxoSmithKline is buying Bristol-Myers Squib’s HIV drugs. GlaxoSmithKline is paying an upfront $350 million for Bristol-Myers’ HIV assets. The deal could result in additional payments of more than $1 billion, depending on if certain milestones are met.”The addition of two potential first-in-class late-stage treatments and several promising early clinical development program strengthens ViiV Healthcare’s pipeline and provides us with further new opportunities for growth,” said David Redfern, Chief Strategy Officer at GSK and Chairman of ViiV Healthcare.
Morgan Stanley is laying off stock traders. The investment bank plans to cut 5% of its stock trading staff in early 2016, people familiar with the matter told the Wall Street Journal. The cuts, which the WSJ says are based “solely on performance,” will impact about 100 traders worldwide, and are part of an annual exercise. Earlier this year, Morgan Stanley said it would trim 2% of its workforce, including 470 front office jobs in commodities and fixed-income.
Stock markets around the globe are mostly lower. Spain’s Ibex (-1.5%) leads the way lower in Europe after Japan’s Nikkei (-1.9%) lagged in Asia. S&P 500 futures are down 9.25 points at 2015.50.
There’s some earnings to watch. Blackberry, CarMax, Carnival, Darden Restaurants and Lennar are set to release their quarterly results ahead of the opening bell.