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Turkey sends tanks into northeastern Syria, China is still open to a partial trade deal with the U.S., and a recession is coming for Hong Kong. Here are some of the things people in markets are talking about today.
A Familiar Foe
Turkey launched a military ground incursion into northeastern Syria to force U.S.-backed Kurdish militants controlling the border area away from the region, the Defense Ministry said. The move comes after President Donald Trump ordered U.S. forces to stand aside, in a dramatic reversal of policy. The Turkish military carried out the incursion together with allied Syrian rebels in an effort to seize areas to the south of the frontier towns; armored vehicles and tanks crossed into Syria after F-16s and artillery units targeted positions of Kurdish YPG militants earlier Wednesday. Turkey has been fighting versions of the Kurdish People’s Protection Units, or YPG, for 35 years. The renewed conflict has sparked concerns that chaos in Syria could lead to a jihadist resurgence.
Stocks in Asia were primed for gains on optimism that the U.S. and China will make progress in trade talks this week despite some conflicting signals on the outlook, and treasuries fell. Futures pointed higher in Tokyo, Sydney and Hong Kong after the S&P 500 Index ended Wednesday up nearly 1% although stocks pared gains in the afternoon after a report that China sought to tamp down expectations for progress. Ten-year Treasury yields climbed to 1.58%. The yuan rose offshore for its biggest gain in almost a month. Elsewhere, the Turkish currency and its stocks dropped.
China is still open to reaching a partial trade deal with the U.S., an official with direct knowledge of the talks said, signaling that Beijing is focused on limiting the damage to the world’s second-largest economy. Negotiators heading to Washington for talks starting Thursday aren’t optimistic about securing a broad agreement that would end the trade war between the two nations, said the official, who asked not to be named as the discussions are private. But China would accept a limited deal -- like those it has sought since 2017 -- as long as no more tariffs are imposed by President Donald Trump, the official said. In return, Beijing would offer non-core concessions like purchases of agricultural products without giving in on major sticking points.
Hong Kong is facing its first recession since the global financial crisis, with little prospect of an immediate recovery as the city confronts its most violent protests in decades. From luxury hotels and major shopping malls to neighborhood stores and restaurants in tourist hubs like Central, Causeway Bay and Kowloon, businesses are closing early or seeing fewer customers. Even when things are open, stores and the airport are quiet, as tourists stay away. The economy in Hong Kong contracted in the second quarter, almost certainly in the third quarter and the data are still deteriorating. The city’s government has struggled to make the case that it has the policy tools to arrest the slide while the pro-democracy protests continue.
A third of the world’s consumers are suddenly nervous to spend. Even some of the most promising consumer markets — including Mumbai and Beijing — are sputtering along, which has created a serious headwind for the struggling global economy. China indicated growth this year could be as low as 6%, the slowest on record, while India’s expansion was the weakest in six years in the June quarter. Among the casualties are auto sales, phone sales and U.S. consumer goods. And, in the consumer arena, bad news begets bad news. The U.S.-China trade war, clampdowns on corruption in India and China, and factory closures are making people more worried about their incomes going into future.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- Trump urged a top aide to help get a criminal case facing a Giuliani client dropped.
- Japan has a new bold — and desperate — experiment in monetary policy.
- Trump’s defiance has frozen the impeachment inquiry, and Democrats need to hone their strategy.
- China’s Xi has backed Pakistan on Kashmir, ahead of a meeting with India’s Modi.
- The Fed minutes show how debate emerges on rate cut policy.
- The next stage of massive California blackouts starts again.
- These five charts suggest that Brexit won’t go Boris Johnson’s way.
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