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Good morning. There’s no sign of progress in U.S. stimulus talks, Wirecard is getting ejected from Germany’s benchmark stock index and the U.K. is changing the way it counts coronavirus deaths. Here’s what’s moving markets.
U.S. Stalemate
The rally in U.S. stocks has now reached 50% since the March lows, taking the S&P 500 to the cusp of a record, but if investors are counting on further government aid to underpin the gains, they may be disappointed. U.S. House Speaker Nancy Pelosi said she rebuffed an “overture” from Treasury Secretary Steven Mnuchin to restart talks on a new round of pandemic relief because the White House hadn’t budged from demands for a smaller stimulus. But Mnuchin said it was Pelosi who refused to compromise, and the negotiations remained in limbo with no sign of the stalemate easing. The big round number that Pelosi and other Democrats are seeking? $1 trillion.
Virus Update
New Zealand, touted as a model for keeping the coronavirus under control, is dealing with a new outbreak, while hospitalizations in Texas, one of the U.S. hot spots, are declining. The U.K. is changing how it calculates deaths from the pandemic following concerns that anyone who tested positive for Covid-19 in England who later passed away — regardless of timing or circumstances — was being recorded as a fatality caused by the virus. Now, deaths will be attributed to the virus if they occur within 28 days of a positive test from a laboratory. That new methodology reduces the number of deaths to 41,329 from more than 46,700 previously, but still means the country has the highest death toll from Covid-19 in Europe.
DAX Ejection
Another milestone in the downfall of Wirecard AG: Deutsche Boerse AG is replacing the payments company in its DAX Index even before the regular quarterly review. The exchange consulted with market participants, who agreed that a company that’s filed for bankruptcy doesn’t belong in the benchmark. Wirecard’s replacement will be announced Wednesday with the change taking effect Aug. 24. Some analysts see food-delivery company Delivery Hero AG as the most likely candidate to enter the benchmark. Meanwhile, German police have issued a search call for Wirecard’s former chief operating officer Jan Marsalek, who went missing after the fintech was implicated in an accounting scandal.
New Tariffs
French and German jams as well as butchers’ and mincing knives are about to get more expensive in the U.S. The Trump Administration stepped up pressure on Germany and France with extra tariffs on some of their goods, a move designed to squeeze the European Union into settling a long-running dispute over illegal subsides to Airbus SE. The 25% duties take effect Sept. 1. The announcement prolongs the burden of import taxes on American businesses and consumers while increasing the pain on transatlantic allies just as the global economy tries to claw back from a steep downturn tied to the Covid-19 pandemic.
Coming Up…
Asian stocks were mostly higher and are set to erases their losses for the year, though stock-index futures are pointing to a flat to lower open in Europe. As earnings come to a close, brewer Carlsberg A/S is predicting a 10% to 15% drop in profit this year as the pandemic dents beer consumption, while German industrial giant Thyssenkrupp AG warned losses would continue this quarter. Oil prices are holding gains near $43 a barrel after closing at a five-month high and traders will get further clues to the health of the crude market this morning when the International Energy Agency issues its monthly oil report. We’ll also get data on French unemployment for the second quarter and, from the U.S., statistics on the number of people who applied for unemployment benefits last week.
