Market Snapshot
Asia: Japan -3.8% to 18166. Hong Kong -2.2% to 21185. China -1.3% to 3167. India -2.2% to 25696.
Europe: London -2.1%. Paris -1.9%. Frankfurt -2.2%.
Futures: Dow -1.9%. S&P -2.1%. Nasdaq -2.1%. Crude -2.9% to $47.79. Gold +0.8% to $1141.90.
Ten-year Treasury Yield -2 bps to 2.17%
Economic News
Auto sales
8:55 Redbook Chain Store Sales
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
Markets
It’s another stormy day for stocks across the world after twin surveys showed China’s manufacturing sector in the grip of its worst slump in several years. China’s official Purchasing Managers’ Index fell to 49.7 in August from the previous month’s reading of 50.0 – the weakest showing in three years, while the Caixin China manufacturing PMI showed a final reading of 47.3 in August, the lowest since March 2009. The figures detail an even sharper slowdown in the world’s second-largest economy, reinforcing fears that have triggered heavy global market selloffs.
South Korean exports tanked by the most in six years in August, bolstering expectations its central bank will cut rates next week to tackle a rapidly darkening outlook. Exports fell 14.7% last month from a year before, dragged down by a heavy slowdown in China and a sharp decline in exports to Europe and Japan. The data is important as it provides the first full trade picture in the region after China’s currency devaluation on August 11.
As widely expected, the Reserve Bank of Australia kept interest rates steady at a record low 2%, stating the current stance will foster growth. Officials have shown increasing reluctance to make further interest rate cuts due to Sydney’s housing bubble, and they have been alleviated of the need for action because of Australia’s falling dollar. The RBA last trimmed rates in May and February.
Eurozone manufacturing growth eased last month, despite factories barely raising prices, adding to the ECB’s woes as it battles to spur expansion and inflation. Markit’s final manufacturing Purchasing Managers’ Index came in at 52.3 in August, below an earlier flash reading that suggested it had held steady at 52.4. The figure, however, has been above the 50 mark that separates growth from contraction for over two years.
Oil prices are pulling back as investors cover short positions and take profits following an 8% rise in the previous session. The surge was fueled by a downward revision of U.S. oil output and a report that suggested OPEC may be considering cutting production. Since last Thursday, WTI crude has climbed 27.5% – the largest three-day dollar increase since February 2011 and the biggest percentage increase since August 1990 – but where is the commodity heading to now?
Stocks
Looking to regain traction in the wearables market, Samsung Electronics (SSNLF) has released its new Gear S2 smartwatch, which will run on the company’s homegrown Tizen operating system. The device sports a 1.2-inch circular screen and comes in two styles – a stylish flagship version and a more understated product dubbed the Gear S2 Classic. Key features include mobile payments, 3G connectivity, smart car keys, remote control of home devices and a battery that can last up to two or three days.
Apple and Cisco have announced a new partnership aimed at helping Apple’s (AAPL) mobile devices communicate more effectively on corporate networks where Cisco (CSCO) gear is widely used. The companies are also working on creating “a seamless experience” for iPhones and iPads in environments featuring Cisco voice/video hardware and Web-conferencing services. The deal comes 13 months after Apple announced a partnership with IBM (IBM), which has since led to Big Blue releasing a number of iOS apps meant for business verticals.
A tax policy advocacy group, Americans for Tax Fairness, is calling for Etsy (ETSY) to be stripped of its B Lab certification unless it dismantles its offshore tax cutting structure. Like many big multinational companies, Etsy uses an Irish subsidiary to manage its tax bill. The method allows the online retailer to conceal its tax-cutting arrangements from public view.
Yahoo’s Chief Executive Marissa Mayer is expecting twin daughters in December, but plans to work throughout her pregnancy. “Since this is a unique time in Yahoo’s transformation, I plan to approach the pregnancy and delivery as I did with my son three years ago, taking limited time away and working throughout,” she wrote in a Tumblr post. Mayer’s pregnancy comes as Yahoo (YHOO) prepares to spin off its stake in Alibaba (NYSE:BABA), which is expected to occur in the fourth quarter.
When it comes to Sprint, SoftBank (SFTBY) has been putting its money where Chairman Masayoshi Son’s mouth is – shoring up support with daily stock purchases over the past three weeks. Since August 10, Sprint (NYSE:S) shares have skyrocketed over 50% as Softbank upped its stake in the carrier to 82%. While more than $7B has been added in market value, Sprint’s cash burn is still an issue: Cash and equivalents fell by $1.95B (compared to $799M a year ago), translating into a $2.06B balance at the end of the quarter.
The White House is considering sanctions against both Russian and Chinese companies and individuals as it tries to stop its alleged cyber theft of commercial and economic information. The move comes as the U.S. grows increasingly frustrated at efforts to steal commercial secrets. President Obama signed an executive order in April declaring a national emergency over cyber attacks, which “constitute an unusual and extraordinary threat.”
In a last-ditch effort to get repaid, RadioShack’s (RSHCQ) junior creditors are suing hedge fund Standard General, the company’s largest pre-bankruptcy shareholder and current owner. The lawsuit also names Wells Fargo (NYSE:WFC) and former Chief Executive Officer Joseph Magnacca, alleging they helped Standard General take over the company at creditors’ expense.
Big-name billionaires David Einhorn and Daniel Loeb saw heavy declines at their main funds during August’s dramatic market selloff, suggesting many other hedge funds suffered significant losses. Einhorn’s Greenlight Capital (GLRE) fell 5.3%, extending the roughly $12B firm’s loss for the year to 13.8%. Loeb’s Third Point fund dropped 5.2%, but is up 1.2% since January.