Global News May 23, 2016

  1. Bloomberg News
  2. Global News May 23, 2016

Bloomberg Business

-Europe’s big weekend: Political developments moved apace in Europe over the weekend. In a vote on Sunday the Greek parliament approved additional austerity measures that will help the country unlock further loans from the euro area. Greece’s creditors are preparing to disburse €11 billion ($12.3 billion) once the country successfully completes a review of its program, and Greek 10-year bond yields fell to a six-month low in trading this morning. In Austria, the results of the election for president – a largely ceremonial role – have been delayed as the run-off between the anti-immigration Freedom Party and a Green Party-backed candidate ended in a virtual dead-heat. That means the absentee ballots being counted today will decide the result. And in Turkey, the newly-installed prime minister has said he will work to change the constitution to transfer the center of power away from his own office and into the hands of President Recep Tayyip Erdogan.

-GE Agrees to $3 Billion Saudi Arabia Investments Away From Oil: General Electric Co. agreed to take part in $3 billion of Saudi Arabia investments as the desert kingdom seeks to diversify its economy away from crude. The U.S. company is collaborating with the Saudi Arabian Industrial Investments Company, a joint venture that includes Saudi Arabian Oil Co., or Aramco, on $1 billion of spending by 2017, SAIIC and GE said in a joint e-mailed statement on Monday. That will be followed by a potential $2 billion to drive projects in water, energy, aviation, digital and other non-oil industries, the companies said. The deals follow a visit to the Middle East country by GE Chief Executive Officer Jeffrey Immelt.

-Markets mixed: Markets are mixed this morning, with the MSCI Asia Pacific Index rising 0.4 percent overnight in Asia, led by Taiwanese and Japanese stocks. In Europe, the Stoxx 600 Index was down 1.0 percent at 6:05 a.m. ET as miners and oil companies slid and commodities fell. S&P 500 futures were 0.1 percent lower.

-Corporate bond woes: Bond investors in Chinese companies are starting to lose patience as defaults increase while excuses for failing to make payments are become increasingly incredible. In the U.S., corporate bond defaults are starting to complex where the cyclical downturn has hit hard, according to new research from Deutsche Bank AG. Things remain relatively calm in Europe so far, as investors look to the European Central Bank’s corporate bond buying program to stabilize the market there.

-U.S. politics: Presumptive Republican nominee Donald Trump is courting evangelical support in his campaign for the White House, as the thrice-married candidate looks to cement support that helped him win the primaries. As Republican stalwarts start to rally around their nominee, Paul Ryan’s decision not to endorse the party candidate is leaving him increasingly.


CNN Money

-Biggest deal of the year: German drugs and chemicals group Bayer (BAYRY) said it’s willing to pay $62 billion in cash for U.S. seeds giant Monsanto (MON). That would be the biggest takeover of the year so far if it happens. Monsanto, (MON) the world’s largest seed seller, said last week it had received an unsolicited takeover offer from Bayer, but it gave no financial details. The $122 per share bid represents a hefty 37% premium over Monsanto’s closing price on May 9, before takeover rumors began to circulate. Shares in Monsanto are surging premarket.

-Arms to Vietnam: President Obama announced the U.S. is fully lifting its ban on lethal arms sales to Vietnam. The embargo had been in place for decades. This could help U.S. defense contractors. Obama said the move was not based on countering China’s rise in the region rather on a desire to continue normalizing relations between the U.S. and Vietnam. Meanwhile, Boeing (BA) is celebrating an $11.3 billion deal to sell 100 737s to airline VietJet. Obama watched as the deal was signed.

-Economics: Fresh evidence of Brazil’s deep recession will emerge on Monday when the country releases its April jobs report. Brazil is expected to post job losses for the 13th month in a row. Brazil’s unemployment rate shot up to 10.2% earlier this year, which is the same level the U.S. jobless rate hit around the Great Recession in 2009. Talking of recession, the British government has warned of a year-long economic slump if voters choose to leave the European Union in a referendum in June.
Information about the state of American manufacturing industry is due on Monday at 9:45 a.m. ET. The new U.S. Markit manufacturing PMI report for May is expected to show a slight improvement compared to the previous month.

-Global market overview: U.S. stock futures are pointing up and European markets are edging higher in early trading. Asian markets ended the day with mixed results.
Crude oil futures are slipping by about 1% to trade around $48 per barrel.
Last week it had looked like oil would power past the $50 mark due to unexpected supply outages.

-Weekly market recap: There was no clear upward or downward trend in the market last week.
The Dow Jones industrial average sank 0.2% over the course of five trading days while the S&P 500 rose 0.3% and the Nasdaq rose 1.1%.