Chinese equities dove sharply in the afternoon trading session today after authorities disclosed investigations into several major brokerages over suspected trading violations. The probes into Citic, Guosen, Founder and Haitong Securities followed additional souring market sentiment on Friday that revealed lackluster Chinese industrial data in October. The Shanghai Composite Index fell 5.5% to 3,436, wiping out most of its gains this month and recording its biggest one day drop since Aug. 25.
Economy
More Asia news: Japan's Prime Minister Shinzo Abe has ordered Cabinet ministers to prepare an extra spending package (likely over ¥3T), including cash handouts for the poorest pensioners, to boost the country's stalling recovery. The measures reflect a new focus for Abenomics, which has been criticized for benefiting mostly big businesses instead of the average citizen. Japanese data for October was also released today. The jobless rate fell to a 20-year low of 3.1%, but household spending sank 2.4% and average incomes dropped 0.9%.
North Korean and South Korean officials met in a demilitarized village on their border Thursday to hold talks aimed at initiating sustainable communication and cross-border cooperation. The meeting is the first intergovernmental interaction since August when the two sides met to defuse a crisis that had pushed them to the brink of an armed conflict. Although the talks may fail to produce a deal, they represent a continued focus on diplomacy instead of military might.
The World Trade Organization remains deeply divided over its flagship global trade pact ahead of a key conference in Nairobi next month, with some members suggesting negotiations should start from scratch. The Doha round of talks aimed at liberalizing trade has faced endless obstacles since the process began in 2001. Biggest potential winners from the WTO's 161 member-states would be the world's poorest countries, most of whom are excluded from regional trade talks going on elsewhere, such as the Trans-Pacific Partnership.
Brazilian President Dilma Rousseff's austerity program is in trouble again and she may face new calls for an impeachment after her point man in the Senate was arrested in a widening corruption scandal. "The arrest felt like a nuclear bomb here in the presidential palace," said a Rousseff aide. Delcidio do Amaral is the ruling Workers' Party's most senior figure in Congress, and is charged for allegedly trying to bribe Petrobras' (NYSE:PBR) former international director, Nestor Cervero.
The shaky condition of U.S. retail will be put to the test this weekend, when stores across the country roll out their Black Friday specials. About 135.8M Americans are expected to shop in stores or online over the four-day weekend, according to the National Retail Federation, but the amount they've spent has declined over the past two years, dropping 11% to $50.9B in 2014. The forecast for frugal shopping also got a boost on Wednesday, when Commerce Department figures showed household spending rose less than expected in October.
Gold is hovering close to its lowest level in nearly six years, weakened by strength in the dollar, expectations of a U.S. rate hike next month and news of lower gold imports into China. If the decline holds, the yellow metal will record its sixth consecutive week of losses, the longest such streak since August. Bullion for immediate delivery -0.5% at $1,064.70.
French President Francois Hollande met Russian President Vladimir Putin in Moscow yesterday and agreed to cooperate in the fight against ISIS, although the two remained at odds over the fate of Syrian President Bashar al-Assad. The news comes after Russia targeted Turkey's economy with a range of sanctions - such as checks on food imports and cutting military/tourism ties - three days after Turkey shot down a Russian warplane on its border with Syria. However, some sanctions are still up for discussion, including closing Russian airspace and ports to Turkish companies, suspending joint projects, and barring cultural exchanges.
Stocks
Alibaba is in talks to buy Hong Kong's leading English language newspaper, the 112-year-old South China Morning Post. On Monday, Bloomberg reported that Alibaba (NYSE:BABA) executive chairman Jack Ma was in advanced talks to take a stake in SCMP, but sources have told Reuters that the talks involve Alibaba rather than a private investment by Ma. It would not be the first time new technology has seen potential in old media. Two years ago, Amazon (NASDAQ:AMZN) boss Jeff Bezos surprised many when he bought The Washington Post for $250M.
Barclays has been hit with a record £72M penalty by the U.K.'s Financial Conduct Authority for failing to conduct proper checks on very wealthy and politically connected customers. Britain's watchdog said the failings related to a £1.9B transaction that Barclays (NYSE:BCS) arranged and executed in 2011 and 2012.
PIMCO and other investors are suing Citigroup (NYSE:C) over the bank's alleged failure to properly monitor toxic securities backed by more than $13.8B of mortgage loans, resulting in $2.3B of losses. According to the complaint, Citigroup breached its duties as trustee for the 25 private-label trusts dating from 2004 to 2007 by ignoring "pervasive and systemic deficiencies" in how the underlying loans were underwritten or being serviced.
BHP Billiton shares came under fresh pressure on Friday after the UN said that mine waste released in its recent dam disaster in Brazil contained toxic chemicals and efforts to protect people were "clearly insufficient." Twelve people died and many more went missing following the dam burst, which sent millions of tons of mine waste cascading through villages and into Brazil's river system. BHP -3.4% premarket.
Just days before the start of the UN climate talks in Paris, Unilever (NYSE:UL) has announced a fresh wave of environmental commitments in a bid to ensure it becomes "carbon positive" by 2030. The company said it would stop using energy from coal by 2020 and will seek to support renewable energy generation, so by 2030 it can make a surplus available to markets and communities where it operates.
A multi-state E. coli outbreak that has sickened at least 19 people who ate rotisserie chicken salad sold at Costco (NASDAQ:COST) has been traced to a celery-and-onion mix. According to the Centers for Disease Control and Prevention, the number of people affected by the outbreak could grow over the next few weeks (even though the product has been removed from store shelves), since the spread of the foodborne illness takes some time to track.
South Korea has now become the first country outside the U.S. to punish Volkswagen (OTCQX:VLKAY) on the basis of its own emissions tests, slapping the automaker with a 14.1B won ($12.3M) fine and ordering a recall of over 125K vehicles. Seoul decided to conduct its own tests after the German giant admitted in September that it installed cheating software in up to 11M diesel cars worldwide. Meanwhile, VW says it has found a way to bring its diesel cars into line with European clean-air standards by updating engine software and installing a small, tube-shaped part. Diesel cars sold in the U.S. will require a more complicated fix due to stricter rules on emissions.
It's just downhill from here... Toyota (NYSE:TM) outsold Volkswagen (OTCQX:VLKAY) for the fourth straight month in October to remain the world's top-selling automaker after sales at the German company slumped following its diesel emissions scandal. Toyota's group vehicle sales totaled 8.35M from January to October, more than the 8.26M vehicles delivered by Volkswagen during the same period. Toyota has now continuously outsold its arch-rival on a year-to-date basis since July.
Two engineers have also been suspended at Volkswagen's (OTCQX:VLKAY) luxury arm Audi (OTCPK:AUDVF) after its larger diesel engines were found evading emissions limits in the U.S. The news widens a scandal at VW which has led to the ouster of its long-time chief executive and wiped more than €20B ($21B) off the group's market value.
Today's Markets
Companies reporting earnings today
In Asia, Japan -0.3% to 19884. Hong Kong -1.9% to 22068. China -5.5% to 3436. India +0.7% to 26128.
In Europe, at midday, London -0.1%. Paris +0.2%. Frankfurt +0.1%.
Futures at 6:20, Dow flat. S&P +0.1%. Nasdaq +0.2%. Crude -2.3% to $42.04. Gold -0.5% to $1064.70.
Ten-year Treasury Yield -2 bps to 2.21%
Today's Economic CalendarIn Europe, at midday, London -0.1%. Paris +0.2%. Frankfurt +0.1%.
Futures at 6:20, Dow flat. S&P +0.1%. Nasdaq +0.2%. Crude -2.3% to $42.04. Gold -0.5% to $1064.70.
Ten-year Treasury Yield -2 bps to 2.21%
Companies reporting earnings today
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