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Biden-Xi Meeting, Dems' Spending Bill, Shell Shake-up - What's Moving Markets

EconomyNov 15, 2021 13:16
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By Geoffrey Smith -- U.S. President Joe Biden and Chinese counterpart Xi Jinping will meet virtually for their most substantive talks yet, aiming to take some heat out of frictions over trade and Taiwan. The Democrats' spending plans are moving closer to being realized, while Elon Musk grinds his teeth in chagrin. Japan's third-quarter GDP data disappoint, while China's October numbers were better than expected. Stocks are set to edge higher but there's no major data due, and Royal Dutch Shell (LON:RDSa) is becoming just 'Shell' as life after the pandemic forces it to ditch a century of tradition. Here's what you need to know in financial markets on Monday, 15th November.

1. When Joe (virtually) met Xi

U.S. President Joe Biden and his Chinese counterpart Xi Jinping will talk later in what officials have briefed is likely to be their most substantial virtual meeting yet.

The meeting comes only days after both leaders achieved some important domestic policy goals, Biden securing agreement for his infrastructure spending package and Xi winning what amounts to a mandate to rule for life from the Communist Party’s top brass.

The two are expected to discuss issues including trade, where China still lags its commitments under the deal it made with President Donald Trump, and Taiwan, which has been subjected to increasingly frequent and aggressive military patrolling by Chinese mainland aviation in recent months.

One data point providing a favorable backdrop is that the yuan is trading close to its highest in three years against the U.S. dollar, despite a sharp slowdown in Chinese growth in the third quarter.

2. Democrats push to pass spending bill this week

House Speaker Nancy Pelosi is lining up a vote on the Democrats' $2 billion spending package on education, healthcare and the energy transition as early as this week, having secured enough votes for it to break the current deadlock, according to various reports. The smaller infrastructure spending bill is set to become law later Monday. 

Tesla (NASDAQ:TSLA) CEO Elon Musk again tried to deflect blame for his substantial sales of Tesla stock on to the party at the weekend, after selling a further block of stock on Friday to meet a tax liability that is due under legislation passed by the previous Congress.

Progressives have started to drop their opposition to the way the spending bill has been pruned, having been chastened by some poor performances in mayoral and gubernatorial elections two weeks ago. The likelihood of Federal Reserve chair Jerome Powell - a bogeyman for the left of the party - being sacrificed as a pawn in this game of 3D chess appear to have risen, with more than one report over the weekend talking up the possibility of Biden nominating Lael Brainard to succeed him. 

3. Stocks set to open higher; Planemakers in focus

U.S. stock markets are expected to open higher later, taking the news of the Democrats’ spending bill positively and still apparently confident that last week’s inflation scare won’t result in a hasty rise in official U.S. interest rates.

By 6:15 AM ET (1015 GMT), Dow Jones futures were up 100 points, or 0.3%, while S&P 500 futures and Nasdaq 100 futures were both up 0.2%

Stocks likely to be in focus later include Tyson Foods (NYSE:TSN), which reports earnings at a time when rising food prices ahead of the holiday season are grabbing attention, and Advance Auto Parts, which has already released quarterly numbers.  Also in focus, as the Dubai Air Show opens, will be Airbus (OTC:EADSY) and Boeing (NYSE:BA). Airbus has already announced a 255-plane order from the stable of airlines led by private equity group Indigo Partners.

4. Coal gets a stay of execution

Coal had its lease of life as an energy source extended after China and India pressured the rest of negotiators at the COP26 conference to drop a commitment to phasing it out.

The final declaration from the summit spoke of a ‘phasing down’ of coal power instead. 

The reluctance of China to wean itself off coal is likely to harden opinion in Europe – and possibly North America – for imposing carbon taxes on imports from countries with lower environmental standards. That process may be helped – at the edges – by a surprising success at COP26 in moving closer to a common set of rules for carbon trading mechanisms.

5. Oil weakens on dollar strength; Farewell, 'Royal Dutch'

Oil prices weakened on Monday as the dollar’s strength and disappointing economic data out of the world’s third-largest economy weighed. Japan said its gross domestic product shrank by an annualized 3.0% in the third quarter, more than expected. The news was only partly offset by slightly better-than-expected industrial production and retail sales data from China.

By 6:30 AM ET, the January futures contract for crude oil traded at $78.67 a barrel, down 1.3% from Friday, while the Brent contract traded down 1.5% at $80.98 a barrel.

Elsewhere, Royal Dutch Shell is set to become just ‘Shell’: the Anglo-Dutch oil major succumbed to the pressures of post-pandemic, pre-energy transition life by scrapping its dual share structure in an effort to squeeze out unnecessary costs

Biden-Xi Meeting, Dems' Spending Bill, Shell Shake-up - What's Moving Markets

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