Here is what you need to know.
China warns. The People’s Bank of China cut its 2015 growth forecast to 7.0% from 7.1% and lowered its 2015 inflation forecast to 1.4% from 2.2%. The central bank also lowered its expectations for imports, exports, fixed asset investment and producer prices. “Although GDP growth in the first half of this year has been weaker than expected, we have reasons to expect some modest recovery in sequential growth in the second half of this year,” the PBOC said in a statement.
Bank of Japan Governor Haruhiko Kuroda made mention of a ‘very weak’ yen. According to Reuters, Kuroda said that Japan’s real effective exchange rate is “very weak”, causing speculation the yen might not drop much further from here. Recent selling had pushed the yen to a 13-month low of 125.86 per dollar. Currently the yen is stronger by 0.9% at 123.21 per dollar.
Germany’s 10-year yield crossed above 1.00%. Wednesday’s selling has Germany’s benchmark yield at its highest level in nine months. The yield hit a session high of 1.056%, up almost 100 basis points from the record low 7.4 basis points set on April 20. The weakness in Germany has corresponded with the continued selling of sovereign debt around the world. Currently, Germany’s 10-year yield is up 6 basis points at 1.01%.
MSCI will not add Chinese shares to its benchmark index. According to MSCI, there are still “remaining issues” over market access to Chinese shares. Recently, China’s Shanghai Composite has been supported by speculation MSCI would include Chinese listings in its emerging market index. The Shanghai Composite is up almost 60% this year.
Tokio Marine Holdings has agreed to acquire HCC Insurance for $US7.5 billion. Tokio Marine will pay $US78 per share, a 37.6% premium to HCC’s closing price on Tuesday. According to the New York Times, “The bid also mirrors moves by Tokio Marine’s domestic rivals to expand outside of Japan, where an ageing population is expected to cut into the results of insurers.” The deal is expected to close in the fourth quarter.
Target will raise its dividend after all. The retailer erroneously posted a press release on its website indicating the company would raise its quarterly dividend 7.7% to $US0.56 per share and expand its stock buyback program by $US5 billion. Target took down the release, creating speculation the dividend increase and buyback would not happen. However, the company has since confirmed that both will indeed occur.
A Netflix split is probably coming. The company’s request of the board to issue more shares has been approved. The new issue will up the total number of shares outstanding to 5 billion, from the current 170 million, and pave the way for a stock split. According to Bloomberg, the stock is up 89% this year.
Tesla’s Model X is coming. Tesla CEO Elon Musk says deliveries for the Model X will begin in three to four months. According to FT, the automaker accepted 20,000 reservations for its third car, which was originally supposed to begin production in 2013. However, it has been delayed because of technical issues. The Model X will likely feature Tesla’s autopilot system.
Stock markets around the world are mixed. Hong Kong’s Hang Seng (-1.1%) lead markets lower in Asia and Germany’s DAX (+0.7%) paces the advance in Europe. S&P 500 futures are up 7.50 points at 2087.50.
US economic data is light. Crude oil inventories are due out at 10:30 a.m. ET and the Treasury budget will be released at 2 p.m. ET. The US Treasury will reopen $US21 billion 10-year notes at 1 p.m. ET.