In This Article:
By Geoffrey Smith
Investing.com -- China gums up President Trump's efforts to make TikTok American. New data show both the Chinese and Japanese economy doing better than expected as Warren Buffett makes a $6 billion bet on Japan's big commodity trading houses. And FDA head Steve Hahn defends his agency's approach to authorizing treatments for Covid-19. Here's what you need to know in financial markets on Monday, August 31st.
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1. China throws a wrench into the TikTok deal
The sale of TikTok’s U.S. operations has been complicated by new Chinese regulations restricting the export of artificial intelligence technology.
The regulations appear to give Beijing an effective veto on the deal and turn the tables on the U.S., which has clamped down on Chinese investment in the country in recent years citing the risks of sensitive technology transfers.
Various reports had suggested that a deal would be agreed at the weekend to sell the operations to a U.S. buyer. Microsoft (NASDAQ:MSFT), Oracle (NYSE:ORCL) and even Walmart (NYSE:WMT) had been linked with the deal.
2. China's domestic economy strengthens, but bank results point to problems
The yuan strengthened against the dollar to its highest in 15 months after an official business survey came in surprisingly strong.
The official purchasing managers index for August rose to 54.5 from 54.1 in July, thanks largely to agriculture and services – the more domestically-focused pillar of the Chinese economy. The survey suggests that domestic demand is starting to catch up with the recovery in industrial production since March.
However, the pandemic has still left its scars on the Chinese economy: the country’s largest banks reported their biggest quarterly drop in profits in a decade, thanks to a rise in bad loans and tighter lending spreads.
3. Stocks set to open higher; Clarida, Bostic speeches eyed.
U.S. stock markets are set to open higher as the ongoing ‘melt-up’ refuses to lose momentum, having been seemingly underwritten by Federal Reserve Chairman Jerome Powell’s speech last Thursday.
By 6:25 AM ET (1025 GMT), the Dow futures contract was up 42 points or 0.2%, while S&P 500 Futures were up 0.2% and the Nasdaq 100 futures contract was up 0.4%.
On a generally light day for data, participants are likely to pay heed to Fed vice-chairman Richard Clarida, whose speech at 9 AM ET (1300 GMT) will flesh out the finer points of the Fed’s shift to ‘average inflation targeting’. The shift has been broadly interpreted as locking in near-zero interest rates for as much as five years.