-May day: Later today U.K. Prime Minister David Cameron will head to Buckingham Palace to tender his resignation to the Queen, who will then ask Theresa May to form a government. She is expected to start naming her new ministerial team this evening, with the key roles of Chancellor of the Exchequer and a new Brexit minister highest on the agenda. The pound, still far below its pre-referendum level, is headed for its longest winning streak in two months as May’s quick appointment brings some calm to what has been a very turbulent three weeks in U.K. politics.
-OPEC wins production battle: Oil production from the Middle East has climbed to a record, according to the International Energy Agency, while U.S. output has slumped. Oil prices have dropped by about 40 percent since OPEC shifted strategy in November 2014 to prioritize sales over prices in order to drive higher-cost producers from the market. While most new projects planned over the next decade are economically viable below $60 a barrel, prices as high as $85 may be needed in order to make sufficient supply available to meet the demand that’s anticipated over the next decade, according to Wood Mackenzie Ltd. West Texas Intermediate crude for August delivery was down 60 cents a barrel at $46.20 at 6:06 a.m. ET.
-Bond market ‘psychosis’: “Call me old-fashioned, but I don’t like investments where if you’re right you don’t make any money,” Jeffrey Gundlach, chief executive officer of DoubleLine Capital said in a webcast, calling the the search for yield a «mass psychosis.» This morning, it seems like the market isn’t ready to listen yet, as Germany sold 10-year bunds with a negative yield for the first time ever and Switzerland sold bonds due in 2058 at an average yield of minus 0.023 percent. Pacific Investment Management Co.’s Total Return Fund, meanwhile, has increased its holding of U.S. Treasuries to the highest level in 18 months.
-Market rally slows down: After setting more records yesterday, the market rally is slowing down a bit today. The MSCI Asia Pacific Index gained 0.8 percent overnight with Japan’s Topix index adding 1.1 percent, to bring its rally since July 8 to 7.5 percent. In Europe, the Stoxx 600 Index was 0.3 percent higher at 6:12 a.m. ET with Spanish banks surging following favourable indications on an outstanding mortgage claims case.
-Commodity rally: While oil is down this morning, raw materials are staging a comeback. Copper briefly topped $5,000 a metric ton, its highest level since April, while iron ore’s recent rally has Macquarie Group Ltd. warning that the price may have reached beyond that warranted by fundamentals. Gold is higher this morning.
-Spinning records: U.S. stocks have never been higher. The S&P 500 closed last night at 2,152 points and the Dow Jones industrial average closed just below 18,348. Investors pushed shares up after a strong U.S. jobs report triggered a rebound from a Brexit-inspired meltdown. The fact that the U.K. found a successor to departing Prime Minister David Cameron much faster than expected has also helped markets by banishing some uncertainty. The overall mood is not as jubilant on Wednesday, but investors certainly aren’t hitting the sell button quite yet. European markets are mixed in early trading, while most Asian markets ended the day with gains.
-Bumpy descent: Shares in Airbus (EADSY) are dipping after the airplane manufacturer said that it would cut production of its A380 jets. It made 27 of the super jumbos last year, but is now targeting annual production of just 20 in 2017 and 12 in 2018. Doubts had been building over the future of the A380 in recent years amid a dearth of new customers.
– Earnings and economics: Shares in Burberry (BURBY) are rising by about 4% in London following the company’s latest quarterly update. The luxury retailers said sales were relatively flat and the current business environment «remains challenging.» However, investors are looking forward to welcoming new CEO Marco Gobbetti. He is taking over from Christopher Bailey, who will remain at the firm as the chief creative officer. After the market closes, transportation firm CSX (CSX) and fast food giant Yum Brands (YUM) will report quarterly earnings. On the economic front, the federal government will issue its weekly crude inventory update at 10:30 a.m. ET. Then at 2 p.m. the U.S. Federal Reserve will release its Beige Book for July, which will give detailed information about the state of the U.S. economy.
-18,000 JPMorgan Chase tellers and branch workers are getting raises: JPMorgan Chase is giving 18,000 of its lowest paid employees significant raises early next year. The company said its lowest wage in the U.S. will increase to $12 an hour in February — an 18% increase. The raises will go primarily to bank tellers and other branch personnel. JPMorgan Chase (JPM) said employees in 75 cities will get pay bumps. The bank has major presences in such high-cost places as New York, San Francisco, Seattle, Los Angeles, Chicago and Washington, D.C. Pay will be based on the local cost of living, and the raises will bring 90% of the bank’s lowest-paid workers to between $13 to $16.50 an hour.