Investing.com -- China's companies are suffering bigly from the trade war. There's a huge dump of economic data coming ahead of Thanksgiving, and private equity group Silver Lake places a big bet on English soccer. Here's what you need to know in financial markets on Wednesday, 27th November.
1. China's companies suffer U.S. tariff hit
The pressure on China’s economy from U.S. tariffs was in evidence, as data showed aggregate industrial profits fell 9.9% on the year in October – the fastest rate since China started compiling the data in 2011. The news came after data showing the U.S. goods trade deficit shrunk to the narrowest in over a year in October.
Analysts at ING pointed out a sharp divergence by sector within the overall data, with trade-related sectors faring much worse than infrastructure-related ones. Chemical fibers, automotive, paper and textiles all suffered, while mining companies and those in non-auto transportation more than doubled their profits.
The news came after more comments from President Donald Trump late on Tuesday which – like so many comments – were carefully hedged, even though markets zeroed in on his claim that the two countries are in the “final throes” of talks to secure a ‘phase-1’ deal to de-escalate the trade war.
2. Pre-holiday data dump incoming
There’s a heavy dump of U.S. economic data due, as weekly jobless claims numbers are moved up from their usual Thursday slot to avoid falling on Thanksgiving. The jobless claims numbers are due at 8:30 AM ET (1330 GMT), along with durable goods orders and prices for personal consumer expenditures, a measure tracked particularly closely by the Federal Reserve.
The most-watched number, however, maybe the second reading of third-quarter gross domestic product. The first reading indicated that annualized growth slowed to 1.9% in the three months through October, the slowest rate since mid-2017.
Durable goods orders for October are also due at 8:30 while the Chicago PMI follows at 9:45 AM.
3. Stocks set to open higher
U.S. stock markets are poised to inch a little higher on the last day of trading before the holiday weekend, supported by President Trump’s latest aside on trade talks with China (which included no mention of whether he intends to veto the bill that would tie China’s trade preferences to its treatment of pro-democracy protesters in Hong Kong).
By 6:15 AM ET, Dow futures were up 21 points or 0.1%, while the S&P 500 and the Nasdaq 100 futures contracts were both up by 0.2%.
European stocks overnight hit a four-year high, also lifted by Trump's comments.
One of the last major earnings reports is due before the bell in the form of Deere & Co., whose update will provide an insight into the ongoing effects of a trade war that has badly hit Chinese purchases of U.S. farm goods.
4. Silver Lake bets on the blue half of Manchester
U.S. private equity made another big bet on European soccer, as Silver Lake agreed to inject $500 million into the reigning English champions Manchester City at a valuation of $4.8 billion. That makes Manchester City notionally the most valuable sporting franchise in Europe.
The deal comes at a time when Liverpool FC, owned by Fenway Sports Group, are running away with the English Premier League after winning the UEFA Champions League, the world’s most lucrative prize in club soccer, last season.
Manchester City is currently majority owned by Abu Dhabi-based sovereign funds. According to the Financial Times, Silver Lake – better known for its investments in tech companies - intends to hold its stake for “about a decade” before exiting via an IPO or sale to another private investor.
5. The U.K. election poll to end all polls (or not)
Want to know who’s going to win the U.K. election? Then head to the website of The Times of London at 5 PM ET (2200 GM) for the publication of what’s seen as the touchstone of opinion polls.
YouGov’s “Multilevel Regression and Post-stratification” poll was the one that correctly forecast the Conservatives would lose their majority in 2017 at a time when all other polls were predicting a comfortable victory for then-Prime Minister Theresa May – just like they do for Boris Johnson at the moment.
The poll uses a sample of around 50,000 voters – as opposed to the usual 1,000-1,500 and analyses them through a number of filters. However, because of its scale, its results may not reflect late changes in attitude.