Investors return from the weekend to find signs of optimism in some financial markets. The Shanghai Composite Index rose by 3.3 percent as traders in China returned after the seven-day-long National Day Golden Week came to an end. Announcements of new support for property markets by the People’s Bank of China and Premier Li Keqiang over the weekend heartened observers anticipating further stimulus measures from Beijing. Meanwhile, bullish narratives helped lift oil prices with front month West Texas Intermediate crude futures trading above $50 a barrel early Monday after Baker Hughes reported the 6th consecutive reduction in rig count last week and the Energy Information Administration reported that daily U.S. production declined by 440,000 barrels from a multi-decade high of 9.61 in June. Separately, Commodities Future Trading Commission trader data revealed net-long positions at the highest level since July. One hint of pessimism was raised this morning by Jefferies quantitative strategist Kevin Chan who wrote in a client note that despite the rebound in equity markets and the improved tone to risk indicators such as the TED spread, global investors actually withdrew money from equity markets to the tune of $4.4 billion last week in favor of money markets.
Fischer sees deflationary pressures as temporary. In comments to the media at the International Monetary Fund’s annual meeting in Lima, Peru on Sunday, Federal Reserve Vice Chair Stanley Fischer provided a noncommittal message regarding the timing of a rate hike by the central bank, saying only that tightening by year-end “may be warranted.” The former Bank of Israel governor expressed confidence that Fed inflation targets will be achieved as short-term declines due to oil prices and a rising dollar pass.
Dell to acquire EMC in latest “mega merger.” On Monday, privately held Round Rock, Texas-based computer maker Dell announced it will acquire Hopkinton, Massachusetts-based publicly traded storage giant EMC Corp. in a transaction valued at $67 billion. The complex deal will be comprised of both cash and shares of a tracking stock for EMC subsidiary VMware
GE nears sale of $30 billion loan portfolio to Wells Fargo. Over the weekend, media outlets reported that San Francisco bank Wells Fargo is near a final deal to acquire a specialty finance portfolio from General Electric as the Fairfield, Connecticut-based conglomerate continues to sell financial assets and services divisions to refocus on industrial products. The transaction could be executed in time for Wells Fargo to include details in the quarterly earnings release due Wednesday.
Chinese regulators focus on high automated trading. On Friday, the China Securities Regulatory Commission released a series of proposed trading rules designed to rein in algorithmic trading that has been blamed by some policymakers for volatility during the recent stock-market selloff. Market observers note that the rules, which will require electronic traders to receive approval before executing strategies, could exacerbate declining trading volumes resulting from Beijing’s intervention in financial markets.
Glencore to sell mining assets. On Monday, embattled Baar, Switzerland-based commodity trader Glencore revealed plans to sell copper mines in Australia and Chile as part of a push to reduce corporate debt. Currently the company’s net debt exceeds $30 billion while sales are expected to bring in less than $300 million. Glencore sparked a rally in zinc prices last week after announcing a cut of roughly one-third in production targets for the metal last week due to low market prices.
Volkswagen faces regulatory scrutiny in China. On Monday, the General Administration of Quality Supervision, Inspection and Quarantine, China’s consumer-product watchdog, announced that 2,000 diesel vehicles would be recalled by Wolfsburg, Germany-headquartered Volkswagen as a separate inquiry into emissions tests by the firm was announced by the Ministry of Environmental Protection. China is a critical markets for the German car maker with joint ventures there accounting for 1.74 million vehicles sold in the first half of 2015, according to company filings.
