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Good morning! Here’s what you need to know in markets on Friday.
1. The world’s top central bankers have delivered what seems to be a collective message this week that quantitative easing is being put back in its box and interest rates are going up – and global markets are taking note, the FT reports. Recent remarks by the heads of the European Central Bank, the Federal Reserve, the Bank of England and the Bank of Canada have convinced many investors the period of historically-low interest rates and unprecedented central bank bond buying will soon recede.
2. Asian bourses followed Europe and Wall Street lower on Friday as a result of speculation that an era of easy money is coming to the end, which also hurt both U.S. and European markets overnight, Reuters reports. Japan’s Nikkei dropped 1.2% to 19,978.73 in midmorning trade after falling to as low as 19,946.51, the lowest level since June 16, while 31 of the Topix’s 33 subsectors were in negative territory.
3. Gold prices steadied on Friday, supported by an easing dollar and falling equities even as central banks suggested monetary tightening, Reuters reports. Spot gold was nearly flat at $1,245.08 per ounce at 2.04 a.m. BST (9.04 p.m. Friday ET).
4. The Queen’s Speech was on Thursday afternoon given parliamentary approval after MPs voted in favour of Prime Minister Theresa May’s legislative programme and defeated all opposition amendments. May announced the details of her legislative programme last week and today MPs from all parties were given the chance to either approve it or vote it down.
5. May was also forced into a new policy on abortion to halt a rebellion by Conservative backbenchers yesterday, the Times reports. In a move that was seized on as a sign of the government’s weak grip on power, the prime minister caved in to pressure to pay for abortions in England for Northern Irish women.
6. Business confidence plummeted following the UK’s snap election in June, which resulted in a hung parliament and has left the country facing yet more uncertainty. Data compiled by Lloyds Bank and released on Friday shows that business confidence was running at 40% before the June 8th election. However, it plummeted to 21% after the vote – its lowest point since August 2016. The overall figure for June stands at 30%, a three point rise on May.
7. Twenty-First Century Fox’s £11.7 billion bid to take control of Sky faces more regulatory hurdles after the government said it was minded to ask Britain’s competition watchdog to examine the deal, the Times reports. Karen Bradley, the culture secretary, told parliament that an Ofcom report on the merger found that it would raise public interest concerns as the combined company “would have the third largest total reach of any news provider.”
8. Scotland is “edging closer” to a recession and its economy could “take a sharp turn for the worse” if Brexit negotiations go badly, according to a new report from leading economic forecasters. A quarterly report from the Fraser of Allander Institute at the University of Strathclyde said Scotland’s economy shrank by 0.2% in the last quarter of 2016 and warned that further negative quarters are “highly possible.”
9. Acquisitions of European companies surged in recent months, amid optimism about the region’s economic prospects, but global deal-making subsided and the total value of U.S. deals fell sharply due to uncertainty about President Donald Trump’s tax reform and deregulation agenda, Reuters reports. Mergers and acquisitions in Europe rose 45% year-on-year to $234 billion in the second quarter, as companies bet the region’s economies will bounce back, according to Thomson Reuters data released on Thursday.
10. German Chancellor Angela Merkel promised to fight for free trade and press on with multilateral efforts to combat climate change at the G20 summit next week, challenging the “America First” policies of U.S. President Donald Trump, Reuters reports. In a defiant speech to parliament a week before she will host a summit of the world’s top economic powers in Hamburg, the northern port city where she was born, Merkel did not mention Trump by name but said global problems could not be solved with protectionism and isolation.