BANGKOK (AP) — Shares were mixed in Europe and Asia on Tuesday after China announced it was shaking up its financial regulatory regime.
KEEPING SCORE: Britain’s FTSE 100 fell 0.1 percent to 7,210.78 while the CAC 40 of France added 0.3 percent to 5,293.67. Germany’s DAX rose 0.1 percent to 12,433.34. S&P 500 futures edged 0.1 percent higher to 2,792.80 and Dow futures climbed 0.2 percent to 25,285.00, pointing to early gains on Wall Street.
CHINA WATCHDOG: China announced plans Tuesday to create a newly powerful regulator to oversee scandal-plagued banking and insurance industries as they try to reduce debt and financial risks. The move is in line with the ruling Communist Party’s efforts to tighten control over state-owned entities that dominate industries including banking, telecoms and energy in an effort to make them more efficient and productive.
QUALCOM-BROADCOM: Singapore-based computer chipmaker Broadcom said in a statement that it strongly disagrees with Trump’s order to block its proposed acquisition of Qualcomm on the grounds it raises national security concerns. The decision, announced late Monday, abruptly ended Broadcom’s four-month, $117 billion bid to buy Qualcomm — a deal that would have been the largest ever completed in the technology industry. Broadcom’s Singapore connections complicated matters, even though the company maintained its physical headquarters in Silicon Valley and virtually all of its shareholders are in the U.S.
ASIA’S DAY: Japan’s Nikkei 225 index gained 0.7 percent to 21,968.10 while South Korea’s Kospi added 0.4 percent to 2,494.49. The Hang Seng in Hong Kong was flat at 31,601.45 and the Shanghai Composite index declined 0.5 percent to 3,310.24. Australia’s S&P ASX 200 dropped 0.4 percent to 5,974.70. India’s Sensex lost 0.4 percent to 33,791.35. Shares rose in Taiwan and were mixed in Southeast Asia, with the SET in Thailand down 0.2 percent.
ENERGY: Benchmark U.S. crude fell 15 cents to $61.21 a barrel in electronic trading on the New York Mercantile Exchange. It lost 68 cents, or 1.1 percent, to $61.36 a barrel in New York. Brent crude, used to price international oils, declined 21 cents to $64.74 per barrel. It shed 54 cents to $64.95 a barrel in London.
CURRENCIES: The dollar rose to 106.90 yen from 106.41 late Monday. The euro fell to $1.2330 from $1.2336.
– Here are the top five things you need to know in financial markets on Tuesday, March 13:
1. Inflation on watch as Fed rate hike nears
The Commerce Department will publish February inflation figures at 8:30AM ET (12:30GMT) Tuesday which will be a key ingredient for the Federal Reserve to contemplate ahead of its March 20-21 monetary policy meeting.
Market analysts expect consumer prices to rise 0.2%, weakening from January’s 0.5% increase, while core inflation is forecast to inch up 0.2%, a touch slower than a month earlier, when core CPI recorded a 0.3% gain.
On a yearly base, core CPI is projected to climb 1.8%, unchanged from the preceding month. Core prices are viewed by the Federal Reserve as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories. The central bank usually tries to aim for 2% core inflation or less.
Rising inflation would be a catalyst to push the Fed toward raising interest rates at a faster pace than currently expected.
Markets widely anticipate the Fed to hike rates by 25 basis points to 1.50%-1-75% at the March meeting while placing the odds for three hikes in 2018 at around 74%, according to Investing.com’s Fed Rate Monitor Tool.
2. Global stocks upbeat ahead of CPI
After the Dow and the S&P 500 failed to follow the Nasdaq Composite’s example as the tech-heavy index hit record highs a day earlier, U.S. futures pointed to a higher open on Wall Street on Tuesday as investors waiting for inflation data. At 5:58AM ET (9:58GMT), the blue-chip Dow futures gained 56 points, or 0.22%, S&P 500 futures rose 5 points, or 0.19%, while the Nasdaq 100 futures edged forward 5 points, or 0.07%.
Elsewhere, European shares were trading higher amid the generally bullish stock sentiment. The benchmark Euro Stoxx 50 gained 0.7% by 5:59AM ET (9:59GMT), Germany’s Dax rose 0.8%, while the FTSE 100 edged forward 0.2%.
Earlier, Asian stocks closed with mixed signs in a choppy session on Tuesday as the mixed performance by U.S. stocks cooled investors’ risk appetite.
3. Trump halts Broadcom takeover of Qualcomm
U.S. President Donald Trump on Monday blocked microchip maker Broadcom’s (NASDAQ:AVGO) proposed takeover of Qualcomm (NASDAQ:QCOM) on national security grounds, ending what would have been the technology industry’s biggest deal ever amid concerns that it would give China the upper hand in mobile communications.
Qualcomm’s shares tumbled nearly 5% in pre-market trade on Tuesday while Intel (NASDAQ:INTC) was up 0.8%. There had been rumors that the Dow component was considering an alternative defensive bid as the Broadcomm-Qualcomm hookup would increase competition.
4. Trump may pick Kudlow for NEC; Pennsylvania special election on tap
Larry Kudlow is the leading contender to head President Donald Trump’s National Economic Council and would take the job if offered it, according to a report from CNBC.
Kudlow appears to be the frontrunner to replace Gary Cohn as a favorite of both Trump and several of his advisors. The choice is notable because Kudlow was openly against the implementation of steel and aluminum tariffs that were arguably the reason for Cohn’s resignation.
Investors were also keeping a close eye on special elections in Pennsylvania which kick off on Tuesday. Trump-backed Republican Rick Saccone will face off against Democrat Conor Lamb in the race to replace GOP member Tim Murphy after his resignation last October.
While Saccone is largely expected to take the House seat in the steel state, the margin of his win is being closely watched to take the pulse of the American public as midterm elections loom. A strong turnout by Democrats may turn up the heat on the Trump administration ahead of several elections that could possibility threaten the Republican majority in the House.
5. Japan to propose crypto regulations to G20
Japan will urge its G20 counterparts at a meeting next week to beef up efforts to prevent cryptocurrencies from being used for money laundering, according to Reuters’ report citing a government official with direct knowledge of the matter.
Cryptocurrencies were also under pressure on Tuesday as Switzerland-based Bank for International Settlements (BIS) said digital coins remain far too risky to be used as legal tender any time soon.
At 5:59AM ET (9:59GMT), Bitcoin, the world’s biggest virtual currency by market cap was down around 4.4% to $9,259.30.
Other major cryptocurrencies were also lower, with Ethereum, the world’s second largest cryptocurrency by market cap, falling about 4% to $703.98.
The third largest cryptocurrency Ripple lost roughly 5% to trade at $0.78384.