Good morning! Here’s what you need to know in markets on Thursday.
1. Chinese stocks are getting hosed amid the threat of higher US tariffs on Chinese imports, as well as the potential for further property market restrictions. China’s Shangai Composite is down 2.5% at the time of writing (7.17 a.m. BST/2.17 a.m. ET). Elsewhere in Asia, Japan’s Nikkei stock index closed down 1.07% and the Hong Kong Hang Seng is down 2.5% at the time of writing.
2. President Donald Trump could be about to double down on the next phase of the trade war with China. Senior administration officials told reporters Wednesday that Trump asked the US Trade Representative to explore the possibility of imposing a 25% tariff on $200 billion worth of Chinese imports to the US. The original proposal proposed hitting the same amount of goods with a 10% tariff.
3. Barclays’ second-quarter pretax profits almost trebled compared with a year ago, the lender said on Thursday, beating analysts’ expectations as it avoided the heavy restructuring and legal costs that blighted past results. Reuters reports that Barclays made a pre-tax profit of £1.9 billion for the three months from April-June, up from £659 million a year ago.
4. The Federal Reserve announced Wednesday that it decided during a two-day policy meeting to keep its key interest rate unchanged. Traders had widely expected this decision, anticipating that the Fed would raise the benchmark for borrowing costs two more times this year including next month.
5. The Bank of England is set to hike interest rates for just the second time since the financial crisis later on Thursday. Markets are pricing a more than 90% chance of a hike but UBS strategist John Wraith says a hike at 12 p.m. BST (7.00 a.m. ET) today is an “unnecessary risk.”
6. British engine-maker Rolls-Royce said that its 2018 results would come in at the upper half of its guidance range after its civil aerospace and power systems businesses posted a stronger than expected first-half performance. Reuters reports that the upgrade to guidance comes despite the company being under pressure to fix problems with its Trent 1000 engine which powers the Boeing 787.
7. Aviva said it was on track to hit its target of 5% growth this year, despite a fall in first-half profits. The Financial Times said that the insurer reported operating profits of £1.44 billion, down 2% on last year.
8. Following the February stock market correction, tight market liquidity was largely looked at as a symptom rather than a cause. A new study from Goldman Sachs throws that into question, arguing that constrained liquidity conditions actually helped cause and worsen the sell-off.
9. Tesla on Wednesday reported second-quarter losses that were greater than Wall Street’s expectations. Shares dipped immediately after the release, before rallying back into the green in after-hours trading.
10. Global manufacturing is plagued by increasing supply-chain bottlenecks, cost pressures, and weakening demand from abroad, leading to a slowdown in production levels and slower hiring levels. IHS Markit’s Global Manufacturing PMI, produced in conjunction with JP Morgan, fell to 52.7 last month after seasonal adjustments, down marginally from 53.0 in June.