Asia: Japan -0.3% to 20554. Hong Kong -1.4% to 23474. China -6.1% to 3748. India -0.2% to 27832.
Europe: London -0.7%. Paris -0.2%. Frankfurt -0.1%.
Futures: Dow -0.2%. S&P -0.2%. Nasdaq -0.3%. Crude -0.5% to $41.66. Gold +0.1% to $1119.80.
Ten-year Treasury Yield +1 bps to 2.16%
8:30 Housing Starts
8:55 Chain Store Sales
Wall Street looks set for a downbeat trading day Tuesday with stock-index futures pointing lower, as a fresh slide in China’s stock market and lackluster earnings pave the way for an uneasy trading session, a day ahead of minutes from the Federal Reserve’s most recent policy meeting are released. China’s Shanghai Composite Index slumped 6.2%, its biggest loss in three weeks, as investors shrugged off signs of recovery in the country’s housing market and the central bank’s latest move to offset capital outflows. The People’s Bank of China injected the largest amount of cash into the financial system on a single-day basis in almost 19 months.
Already hit by a devalued yuan, Thailand’s baht has now fallen to its weakest level since 2009 after a powerful bomb blast killed at least 20 people in Bangkok’s central shopping district. The currency slid 0.6% to 35.581 per dollar, while the county’s SET All-Share index dropped 2.5%. Thailand’s Prime Minister Prayuth Chan-ocha described the bombing, which took place near a notable Hindu shrine, as the “worst ever attack” on the country.
The Greek government appears likely to call a confidence vote in the next few days, casting a shadow over the country’s third bailout program. Although the majority of the Greek parliament backed the bailout deal last Friday, Prime Minister Alexis Tsipras had to rely on opposition parties’ support to get the reforms approved. As such, his position as leader would be in doubt if a confidence vote occurs.
Both crude oil benchmarks are now almost a third below their last peak in May as traders brace for lower refinery consumption after the summer, while weak global demand and high production fuel concerns about oversupply. Data shows speculators have taken huge bets on further falls and hedge funds have cut their net long holdings of Brent for a fourth straight week. Brent crude is trading down 0.4% at $48.53 a barrel, while WTI is 0.5% lower at $41.66/bbl.
Travel from the U.S. to Cuba has already increased 35% since the beginning of January, and the Obama administration is now working on a deal that would allow scheduled commercial flights by the end of 2015. Presently, Americans must take charter trips to Cuba, and their visit must fall into one of 12 authorized categories due to a congressional ban. The new move would loosen the terms of those categories, permitting direct commercial flight bookings between the two countries.
The search for a new chief to replace retiring Richard Fisher took far longer than expected, but the Dallas Fed has finally named Robert Steven Kaplan as its new president, effective Sept. 8. Up until 2006, Kaplan was vice chairman at Goldman Sachs (GS), leading investment banking activities. He’s currently a management professor and senior associate dean at Harvard.
Federal regulators have granted Royal Dutch Shell (RDS.A, RDS.B) the final permit it needed to drill in the Arctic off Alaska’s northwest coast. The permit was granted after the company brought in a vessel carrying a device (capping stack) needed to stop a potential well blowout. Shell has spent $2.1B on leases in the Arctic’s Chukchi Sea, and up to $7B on exploration in Chukchi and the nearby Beaufort Sea.
Petrobras is expected to face the largest penalty ever levied by U.S. authorities in a corporate corruption investigation, Reuters reports, outlining that the state-run oil company may pay fines of $1.6B or more. To date, the largest U.S. settlement of corporate corruption charges was a 2008 agreement with Siemens (SIEGY), which paid $800M for its role in a bribery scheme. Petrobras’ (PBR) settlement may still be a while away. The process is likely to take another 2-3 years.
Canada’s Brookfield Infrastructure Partners is acquiring Australian ports operator Asciano (AIOYY) for A$8.9B ($6.6B), scooping up an asset that has been made cheaper by a slump in coal prices. Brookfield’s (BIP) deal, the largest takeover of an Australian company since 2011 and the biggest acquisition by a Canadian firm in that country, still needs shareholder approval, regulatory clearances and third-party consent at certain ports.
The two explosions in the Chinese port of Tianjin last week could generate total insurance losses of $1B-$1.5B, Credit Suisse analysts said, citing initial estimates based on media reports. Over 8,000 vehicles worth about $625M were destroyed in the blasts, including cars made by Volkswagen (VLKAY), Toyota (TM), Renault (RNLSY), Hyundai (HYMLF) and Mitsubishi (MSBHY), while damage is still being assessed in other sectors. Zurich Insurance (ZURVY), Allianz (AZSEY) and other groups say they have already received insurance claims but could not provide an estimate of potential losses.
The FCC has voted unanimously to deny $3.3B in small-business discounts sought by two partners of Dish Network (DISH) in an airwaves auction earlier this year. The credits were applied for via Dish’s use of “designated entities” – SNR Wireless and Northstar Wireless – but a review found that it had the power to control units and therefore didn’t qualify for the discounts. Dish now has three options: refuse to buy the spectrum and pay a penalty; pay the additional $3.3B; or sue the FCC to overturn the decision.
A computer hack at the IRS in which thieves stole information from thousands of taxpayers is much broader than the agency originally disclosed. An additional 220,000 potential victims had information stolen, bringing the total number of potential victims to more than 334,000. In the breach, criminals used stolen data – Social Security numbers, birth dates and mortgage payment details – to gain access to taxpayers’ past returns.
Only months after PetSmart decided to go private, another one of the country’s pet food retailers is planning to go public. Petco will aim for a market value of roughly $4B, although that figure could change based on investor feedback and market conditions. The IPO comes nearly a decade after the chain was taken private in a $1.7B leveraged buyout by P-E firms Leonard Green and TPG Capital.
Another brick has fallen from the contract-wireless wall, after Sprint (S) CEO Marcelo Claure announced the carrier will do away with contracts and shift to a leasing model by year’s end. Ending its subsidies means that leasing or an upfront buy will be the only ways to get a smartphone from Sprint in the future. The move leaves AT&T (T) as the only carrier of the U.S. big four which is still offering to subsidize smartphone purchases.