Morning Deal: In Search of Pelosi’s Plane

Morning Deal: In Search of Pelosi's Plane
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A man reads the Global Times newspaper which features a front-page article on the Asian tour of the Speaker of the US House of Representatives. Smell of gunpowder.” REUTERS/Tom├ís Pedro

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An Next Day Look at Anshuman Dagger Markets

Just as markets seemed to factor in a less aggressive Federal Reserve and relief for economies and businesses, politics is playing the spoilsport.

Tensions have flared with US House Speaker Nancy Pelosi preparing to arrive in Taiwan on Tuesday as part of her tour of Asia. read more

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The United States says it will not be intimidated by Chinese threats to never “stand idly by” if Pelosi makes the trip to the self-governing island claimed by Beijing.

The White House – which did not confirm the trip – said he had the right to go. But China has repeatedly warned against a visit by Pelosi.

Relations between the world’s two largest economies have not been smooth, and analysts see the visit by Pelosi, a longtime critic of China, as unsettling for markets.

Rising risk aversion has forced Chinese stocks (.CSI300) fell the most in three months and the Taiwanese dollar is at its lowest level in more than two years.

The nervousness is most apparent in US Treasuries, with 10-year Treasury yields falling as much as 9 basis points to 2.5160%, a four-month low, and retreating from a high of 11 years of 3.4980% reached in mid-June.

Fragile market backdrop follows weak economic data.

Surveys on Monday showed factories in the United States, Europe and Asia struggled to regain momentum last month due to sluggish global demand and China’s strict COVID-19 restrictions.

That sent oil prices to a two-week low, while gold bulls pushed prices of the yellow metal to four-week highs.

European stock futures signaled a weak start on Tuesday.

In Europe, German retail sales posted the biggest year-on-year decline since 1994 on Monday, falling 8.8% in real terms.

Below, investors were somewhat relieved after Australia’s central bank raised its cash rate by 50 basis points as expected, but tempered guidance on further hikes going forward as it struggles with rising inflation and the slowdown of the economy.

Key developments that should provide markets with more direction on Tuesday:

Australia’s central bank raises rates: read more

Federal Reserve Bank of Chicago President Charles Evans talks about the economy and monetary policy

Top earners: BP, Generali, DuPont, Caterpillar, Starbucks

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Information of Anshuman Dagger; Edited by Vidya Ranganathan

Our standards: The Thomson Reuters Trust Principles.

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