1. Stocks Slip After Record Rally; Oil Retreats
U.S. futures slipped and European stocks steadied on the last day of the month after a record-breaking rally in global equity markets. Oil extended a retreat on signs of discord among OPEC+ ministers. The rotation that sent stocks to all-time highs showed signs of a slight reversal, with technology companies holding firm, while small-caps, banks and energy producers were broadly lower. The MSCI Asia Pacific Index sank 1.6%, the biggest loss in a month. Investors have become cautious after big gains in the last few weeks that were driven by the vaccine news.
Futures on the S&P 500 Index declined 0.5% as of early morning London time.
The Stoxx Europe 600 Index was little changed.
The MSCI Asia Pacific Index declined 1.6%.
The MSCI Emerging Market Index fell 1.3%.
2. OPEC+ Heads Into Crucial Talks Still Split Over Output Plans
OPEC and its allies headed into a two-day meeting with ministers still split on plans to delay a production boost, after failing to reach consensus in talks on Sunday night. The 23-nation coalition led by Saudi Arabia and Russia is debating whether to maintain the output cuts at current levels, deferring the increase scheduled for January. Some members are concerned that global markets remain too fragile to absorb additional barrels, while others are keen to sell more crude.
3. London in Deep Trouble as Brexit Finance Deal Unlikely
The golden age of the City of London began with a big bang. It’s ending with a whimper. Fears that the finance powerhouse that emerged from Margaret Thatcher’s 1986 deregulation — known as the Big Bang – will gradually be dismantled have deepened with a recent flurry of announcements about some business heading to the European Union as Britain enters the last month of the Brexit transition period without a financial-services deal in sight. The latest shift comes Monday at 8 a.m. when London Stock Exchange’s stock trading platform Turquoise Europe goes live in Amsterdam. It joins other trading venues like Cboe Europe and Aquis Exchange setting up shop on the continent as part of their no-deal Brexit plans.
4. China Says Its Grain Imports Not to Blame for Global Price Surge
A Chinese government official rebuffed the idea that the nation’s massive corn and wheat imports are to blame for the jump in international prices, saying the coronavirus pandemic and uncertainty in global food trade drove “panic” in the industry. Grain prices have risen because of export restrictions by major suppliers and the stockpiling of food reserves by some countries. China’s grain imports only account for a 10th of global trade, with the majority being soybeans, and have a limited impact on international food prices. Crop prices have been on a rise as China’s buying gained pace in recent months amid tighter-than-expected world grain and oilseed supplies. The second-biggest economy surpassed for the first time ever an annual corn-import quota set by the World Trade Organization as purchases in October hit a record high.
5. Iran Pledges Payback at ‘Right’ Time Over Scientist Killing
President Hassan Rouhani said Iran will respond to the killing of its top nuclear scientist “when the time is right,” and accused Israel of an “act of terrorism” in a significant escalation of tensions in the Persian Gulf. Mohsen Fakhrizadeh, a senior nuclear scientist working for the Ministry of Defense, was assassinated Friday in a shootout and car bombing on the outskirts of Tehran. Promising “severe revenge,” officials also pointed the finger at the U.S., potentially complicating President-elect Joe Biden’s bid to revive the Iranian nuclear deal.
6. U.K. Mortgage Approvals Unexpectedly Jump to 13-Year High
U.K. mortgage approvals jumped to the highest since before the financial crisis in October as buyers rushed to take advantage of tax incentives. Lenders approved 97,532 loans in October, the most since 2007, the Bank of England said Monday. Net consumer credit fell by 590 million pounds (INR 5800 cr) as households paid down debt, mostly on credit cards. The housing market is defying a broader economic downturn because of pent-up demand from the Covid lockdowns and a temporary tax break on home purchases. The BOE expects the unemployment rate to climb higher than 7% next year from the current 4.8%. Economic output won’t recover to pre-pandemic levels until 2022, the central bank’s latest forecasts show.
7. ABN Amro to Cut About 2,800 Jobs as Investment Bank Shrinks
ABN Amro Bank plans to cut about 2,800 jobs over four years as the Dutch lender retreats from large parts of its investment bank and digitization allows it to operate with a smaller staff. The company plans to reduce costs by about $840 million (INR 6200 cr) by 2024. The workforce will shrink by about 15%, with most reductions to start in 2022, Chief Executive Officer Robert Swaak said in an investor update on Monday. In August, Swaak announced plans to cut a third of the lender’s business with corporate clients, dropping company finance outside of Europe and exiting trade and commodity financing altogether.
8. Cyber Monday Projected to Hit Pandemic-Fueled $12.7 Billion in Sales
Online shoppers in the U.S. are expected to drop a record-busting $12.7 billion (INR 94,000 cr) on Cyber Monday — the busiest e-commerce day of the year — presenting a valuable opportunity for retailers whose websites, customer service departments and delivery operations can withstand the period of crushing traffic. Amazon.com, Walmart, Target, Best Buy and others have been preparing for the 2020 holiday season for months. This week will be the ultimate test for their new investments in ramping up delivery capacity and adding features like parking lot pickup for digital orders. The Covid-19 surge kept crowd-averse shoppers away from physical malls on Black Friday, reinforcing predictions that online shopping will soar this year. Adobe Analytics predicts that Cyber Monday spending for 2020 will climb by 35% – more than double the growth rate in the years prior to the pandemic. That also means that any service interruptions on Cyber Monday — slow websites, payment processing problems, shopping carts that vanish before checkout – could be painful for companies.
9. China Oil Giant CNOOC Targeted by U.S. After Years of South China Sea Tension
China’s third-biggest oil company faces a U.S. blacklist, which could spur major outflows from its Hong Kong-listed unit, after years of involvement in offshore drilling in disputed South China Sea waters. China National Offshore Oil Corp., the nation’s main deepwater explorer, is among four companies to be added to a list of firms owned or controlled by the Chinese military. The move comes as the Trump administration plans several new hard-line moves against Beijing in the final weeks of its term. CNOOC hasn’t yet received any official notice or decision from any relevant U.S. government agency, the firm’s listed unit said in an exchange filing in Hong Kong.
10. China’s factories crank up output, but jobs, debt remain concerns
China’s factory activity expanded at the fastest pace in more than three years in November, while growth in the services sector also hit a multi-year high, as the country’s economic recovery from the coronavirus pandemic stepped up. Upbeat data released on Monday suggest the world’s second-largest economy is on track to become the first to completely shake off the drag from widespread industry shutdowns, with recent production data showing manufacturing now at pre-pandemic levels. But companies are still not expanding their payrolls, the figures show, and some analysts point to rising debt levels among state-owned firms as another possible headwind for the economy.
