Here is what you need to know.
China could be downgraded at S&P. S&P cut its outlook for China’s sovereign credit rating to negative from stable, but kept its rating at AA-. The rating agency stated, “economic imbalances in China that are unlikely to diminish at the pace we previously expected.” Additionally, S&P said, “However, it should be noted that China’s rating is a high AA- and even if this eventually results in a downgrade, China is still likely to be an A+ credit, which is still much better than all emerging market peers and many middle income and developed countries.” China’s yuan ended Thursday’s session stronger by 0.1% at 6.459, a three and a half-month high.
One of China’s biggest investment banks has reportedly defaulted. Guosen Securities, one of China’s largest investment banks, has reportedly defaulted on a dim sum bond, and will miss a 38 million renminbi payment ($5.9 million) on April 24, according to the Financial Times. A dim sum bond is a bond that was issued outside of China, but in renminbi. The default is the first in almost 20 years by a state-owned enterprise in an offshore market, and could set a precedent for how offshore units of SOEs are handled going forward.
The eurozone is still in deflation. Eurozone prices fell 0.1% year-over-year in March, matching economists’ forecasts. The reading was a bit better than the -0.2% drop in February, according to the latest data released by Eurostat. Stripping out the volatile food and energy components, prices climbed 1% YoY, an improvement from February’s 0.8% YoY print. However, the number still remained well below the European Central Bank’s 2% target. The euro is trading at a five-month high, up 0.4% at 1.1379.
Turkey’s GDP was strong. Turkey’s economy expanded at a 5.7% YoY clip in the fourth quarter, surpassing the 5% growth that was expected by the Bloomberg consensus. The Financial Times reports Commerzbank believes the report is unlikely to have a big impact on Turkey’s currency, the lira, because its already old data, broader EM movements are more important, and traders are closely watching the country’s central bank. The lira hit a four-month high of 2.8203 per dollar on the news.
Argentina is ready to end its 14-year battle with creditors. Argentina’s Senate voted 54-to-16 in favour of settling with its bondholders. The Senate approval follows a similar outcome in the Lower House earlier in March. A settlement will help recently elected Argentine President Mauircio Macri regain access to the debt market and get people investing in Argentina again.
Tesla’s Model 3 debuts on Thursday. The Model 3’s release is highly anticipated as it has a base price of $35,000, making its Tesla’s first vehicle that’s cheap enough to be considered “mass market.” The automaker will unveil the car at an 8:30 p.m. PT event at its headquarters in South California.
Sharp’s CEO is out. On Wednesday, Foxconn announced it was buying a two-thirds stake in struggling electronics maker Sharp. On Thursday, the Yomiuri newspaper reported, Foxconn is planning to remove Sharp’s CEO and a majority of its board.
Micron Technology reported a mixed quarter. The chipmaker lost an adjusted $0.05 per share, which was better than the $0.09 loss than was anticipated by the Bloomberg consensus. Revenue tumbled 29.6% to $2.93 billion, missing the $3.05 billion that Wall Street was expecting. “Although we continue to navigate challenging market conditions, we are on track with deploying our advanced DRAM and NAND technologies and improving our cost structure,” CEO Mark Durcan said in the earnings release.
Global stock markets are mostly lower. Japan’s Nikkei (-0.7%) lagged in Asia and Spain’s IBEX (-1.6%) paces the decline in Europe. S&P 500 futures are down 1.75 points at 2053.25.
US economic data picks up a bit. Challenger Job Cuts will cross the wires at 7:30 a.m. ET, before initial and continuing claims are released at 8:30 a.m. ET and Chicago PMI is announced at 9:45 a.m. ET. Natural gas inventories are set for a 10:30 a.m. release. The US 10-year yield is down 1 basis point at 1.81%.