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Chinese stock markets and the country’s currency have been pummeled in recent months by fears about the economy and the trade war. Chinese officials made a rare, coordinated attempt on Friday to ease those concerns.
Central bank chief Yi Gang said that the market slump didn’t reflect the state of the economy, which he described as “moving forward” in a stable manner. He added that the government would take more measures to support the economy. Similar comments were made by financial regulators and President Xi Jinping’s top economic adviser.
Stocks in Shanghai closed up 2.6%, recovering most of Thursday’s decline of almost 3%. The Shanghai Composite has lost 23% so far this year.
“A recession in the near-term is not inevitable, but the risk of one by 2020 has increased substantially in the past few months,” Ronald Temple, head of US equity for Lazard Asset Management, told CNN Business. “Take trade wars off the table and that significantly reduces the risk of recession.”
2. Saudi Arabia and Silicon Valley: Saudi Arabia’s global network of business ties and investments are coming under ever closer scrutiny as questions mount and the US government hardens its stance over the disappearance and apparent killing of journalist Jamal Khashoggi.
Treasury Secretary Steven Mnuchin said Thursday that he would not attend a major investment summit in Riyadh next week. Later that day, President Donald Trump said for the first time he believes Khashoggi is no longer alive. There would be “severe” consequences for Saudi Arabia if it is found to be involved in the killing, Trump added.
3. Euro woes: The euro is under pressure, and Italian bond yields are rising after European officials fired off a stern warning to the government in Rome about its budget.
The European Commission wrote to Italian Finance Minister Giovanni Tria on Thursday, telling him that plans to boost the budget deficit may constitute a “particularly serious non-compliance” with EU rules designed to ensure the stability of the euro.
Italy’s government debt stands at 130% of GDP. That’s the second highest level in Europe after Greece. Inflating the budget deficit would further add to that huge mountain of debt.
Moody’s is expected to publish its latest view of Italy’s credit rating after European markets close.
Friday — Procter & Gamble (PG), VF Corp (VFC) and State Street (STT) earnings
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