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Top 5 Things to Know in the Market on Tuesday

EconomyNov 26, 2019 06:39
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© Reuters. -- More happy talk from China on trade, while Fed Chairman Jerome Powell sees the economy's glass as "more than half full" (so no more rate cuts for now). Elsewhere, eBay keeps up the flurry of M&A activity and the UN takes a swipe at countries for failing to live up to their Paris Accord pledges. Here's what you need to know in financial markets on Tuesday, 26th November.

1. China's trade call

China’s Commerce Ministry kept up the happy talk on trade, issuing a statement that China and the U.S. had “reached consensus on properly resolving relevant issues” on a phone call with U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin. It added that the two sides had agreed to stay in contact on the remaining points for a “phase one” trade deal.

However, the statement provided no further detail and markets reacted with a shrug, having already rallied on Monday in the wake of equally waffly statements about Chinese commitment to curbing intellectual property theft.

2. Liquidity fills Powell’s glass

Federal Reserve Chairman Jerome Powell gave a strongly upbeat assessment of the economy in a speech on Monday evening in Providence, R.I.

“At this point in the long expansion, I see the glass as much more than half full,” Powell said in comments that all but ruled out any further cuts to interest rates for the foreseeable future.

He stressed though that the Fed remains data-driven, and there’s data aplenty due Tuesday. The October trade balance is published at 8:30 AM ET (1330 GMT), along with retail inventories, while S&P/Case-Shiller house price data for September are due at 9 AM, to be followed an hour later by new home sales data for October.

Also at 10 AM, the Conference Board publishes its consumer confidence survey for November, while the Richmond Fed publishes its monthly business survey.

3. EBay continues M&A flurry

eBay (NASDAQ:EBAY) agreed to sell StubHub to Swiss-based Viagogo for $4.05 billion, a deal that will go some of the way to appeasing activist investors Elliott Management and Starboard Capital who have been pressuring it to streamline since January.

The deal follows a flurry of activity on Monday that saw the confirmation of Charles Schwab's (NYSE:SCHW) all-share offer for TD Ameritrade (NASDAQ:AMTD), LVMH (PA:LVMH) paying $16 billion for Tiffany (NYSE:TIF) and Novartis AG (SIX:NOVN) buying Medicines Co. (NASDAQ:MDCO) for $9.7 billion.

While Schwab is taking advantage of elevated equity market to use its shares as currency in the Ameritrade deal, Novartis and LVMH are borrowing to raise cash for their respective deals.

4. Stocks already have an eye on Thursday

U.S. stock markets are settling in for the holiday weekend already, by the look of things. All three major indices are set to open effectively unchanged, shrugging off the latest Chinese comments on trade.

By 6 AM ET, Dow futures were down 2.5 points, less than 0.1%, while S&P 500 futures and Nasdaq 100 futures were also flat, unmoved even by the confirmation of the merger of Charles Schwab and TD Ameritrade.

5. API inventories due; UN report blasts lack of Paris compliance

Oil traders can’t afford to relax yet, however. The American Petroleum Institute will release its weekly assessment of crude oil stocks at 4:30 PM ET. Crude prices are drifting just below two-month highs on a combination of a series of upbeat comments on trade and signs of a slowdown in U.S. shale oil output growth.

Elsewhere Tuesday, an annual report by the UN on Climate Change again argued the need for more dramatic action to cut fossil fuel use, highlighting the difference between countries’ pledges under the Paris Accord and their actual policies.

"If governments don't change policy, we see emissions sky rocketing,” International Energy Agency director Fatih Birol said at a presentation.

Top 5 Things to Know in the Market on Tuesday

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