Good morning. Weak China data comes as new tariffs hit the country, hopes over a Brexit pact are fading, some Turkish officials face sanctions and Catalan separatists were jailed. Here’s what’s moving markets.
China Deflated
Data overnight showed China’s factory deflation deepened in September due to slowing output growth and falling raw material prices, adding to signs that the country’s domestic slowdown is an increasing drag on the struggling world economy. That news came amid fading optimism about an easing in the trade war as China indicated it needs to go over some details before signing. Import taxes on all remaining Chinese shipments to the U.S. are due to today. Japanese shares rose after a long weekend, while the rest of Asia was quiet.
Catalans Jailed
Two years after Catalonia’s then-government tried to stage a breakaway from Spain with an illegal referendum, some of the separatists leaders got jail sentences of up to 13 years, handed down by the country’s Supreme Court. While Acting Prime Minister Pedro Sanchez said the verdicts showed Spain’s democracy functioning in a fully transparent way, protesters took to the streets in Barcelona, blocking railways and major roads. Even Pep Guardiola is getting involved. And if you have a flight booked to Barcelona, check before you travel.
Brexit in Balance
Markets just can’t ignore Brexit: After all the talk of an agreement on Friday, U.K. Prime Minister Boris Johnson’s deal now hangs in the balance after the European Union said more time was needed ahead of a planned decision Wednesday over whether there will be a deal for leaders to sign during an Oct. 17-18 summit. Monday’s Queen’s speech brought much pomp and ceremony, but little market impact. Johnson used the event to set out a legislative plan covering things like prison terms and pension schemes that he hopes to deliver once Brexit is out of the way.
Turkey Sanctioned
Turkey remains high on the agenda, with the U.S. announcing sanctions on three senior Turkish officials and sharply increasing tariffs on steel in response to the military operation launched by Ankara last week. The White House called on Turkey for an immediate cease-fire, just as Syrian government forces pushed closer to the Turkish border after striking a deal with Kurdish fighters. As well as the lira, watch bank stocks with Turkish exposure, like Spain’s BBVA SA and Italy’s UniCredit S.p.A.
Coming Up...
Big U.S. bank earnings begin with Goldman Sachs Group, Inc., JPMorgan Chase & Co. and Citigroup Inc. all due today. Meanwhile, the IMF is expected to present a downbeat World Economic Outlook, just as a Bloomberg analysis says there’s a 27% chance that the U.S. will enter a recession. Central bankers speaking include Federal Reserve’s James Bullard in London.
Source: bloomberg