More signs of a slowing economy.
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What you need to know today
- Taiwan President Tsai Ing-wen met U.S. House of Representatives Speaker Kevin McCarthy, the highest-ranking U.S. official ever to meet a sitting Taiwan president on U.S. soil. Beijing did not bite its tongue in expressing disapproval ahead of the meeting, condemning it as efforts to "propagate" Taiwan's independence, calling supporters of the idea "separatists." All this while European officials are visiting China: French President Emmanuel Macron and the European Commission's President Ursula von der Leyen.
- Job growth in the U.S. slowed in March, according to private payrolls that rose less than expected for the month. The latest report by payroll processing firm ADP showed the pace of private sector hiring rose by 145,000 jobs, lower than the previous month's reading and below estimates by Dow Jones. The report serves a precursor to the U.S. Labor Department's nonfarm payrolls report, in which economists expect to see payroll growth of 238,000 and an unemployment rate that holds at 3.6%.
- Stocks on Wall Street were mixed, with the Nasdaq Composite down 1%, its third-straight losing session. The Dow Jones Industrial Average rose slightly, while the S&P 500 inched lower. Europe's Stoxx 600 traded lower overall as uncertain investor sentiment resurfaced.
- UBS tried to reassure investors at its annual general meeting, following the bank's takeover of fallen rival Credit Suisse last month. The deal remains mired in controversy, legal peril and public skepticism. UBS Chairman Colm Kelleher described the date of the announcement a "historic day and a day we hoped would never come." Credit Suisse held the final independent annual meeting of its 167-year history in Zurich the day before.
- PRO Despite lots of uncertainty about the U.S. economy dragging down the stock market, these stocks are well-liked, cheap and are set for big earnings growth.
The bottom line
Good morning from Singapore. We continue to see the market pricing in what we fear the most – a recession. Investors shifted toward defensive stocks such as healthcare, after the latest private payrolls report from ADP gave another sign the economy is slowing.
The 10-year Treasury yield also fell to its lowest since mid-September, and its spread with the 3-month Treasury yield continued to grow. Such a yield-curve inversion is seen by many on Wall Street as a signal that a recession is near. Gold, seen by many as a safe asset, surpassed the $2,000 mark, and the dollar strengthened against Asian currencies. Yet another mixed session is seen in store for Asia-Pacific markets today.
Investors are going to closely examine Friday's U.S. unemployment data and nonfarm payroll numbers, which will almost certainly help shape the Federal Reserve's interest rate policy.
A widening rift between Washington and Beijing is adding to long-term worries about the economy. In fact, the IMF estimated in a Wednesday report that global tensions could disrupt foreign direct investment to the tune of almost 2% of long-term global output. In the report's words, "a fragmented world is likely to be a poorer one."
China has warned the U.S. to steer clear of a closer relationship with Taiwan — which Beijing refers to as its "internal affairs." House Speaker McCarthy in a press conference following his meeting with President Tsai compared Taiwan to Ukraine, adding that if the United States had delivered more weapons to Ukraine, it could have changed Moscow's pre-invasion calculus.
And we'll see what European leaders have to say as they visit Beijing to denounce Russia's invasion, following Chinese President Xi Jinping's visit with Russian President Vladimir Putin. EC President von der Leyen's words seem to match the sentiment on Wall Street: Things have become, she said ahead of her trip, "more difficult in the last few years."
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