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Top 5 Things to Watch on Thursday, Dec. 19

EconomyDec 19, 2019 12:37
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© Reuters. -- The House votes to impeach President Trump, Nike (NYSE:NKE) and Accenture (NYSE:ACN) report earnings, while jobless claims, existing home sales and the Philadelphia Fed manufacturing survey add to a data-packed week. Central banks across the world hold meetings, with Japan standing pat, Sweden tightening policy to escape the trap of negative interest rates and the Bank of England wondering how to react to the new government's policy. Here's what you need to know in financial markets on Thursday, 19th December.

1. House votes to impeach Trump

The House of Representatives voted to impeach President Donald Trump in a vote that went – as expected – almost entirely along party lines.

Trump will now face trial in the Senate, although the timing of that is still not clear. Reports suggest that House leader Nancy Pelosi will delay sending the articles of impeachment to the Senate, hoping to build pressure for key witnesses such as former National Security Advisor John Bolton to testify. Bolton was directed by Trump not to testify during the House’s impeachment inquiry.

Opinion polls suggest that the population is split equally between those who agree with impeachment and those who disagree. However, 75% of respondents agree that Trump’s pressure on Ukraine to investigate the son of Joe Biden was wrong, and 48% say they will definitely not vote for Trump in next year’s election, according to CNBC.

2. Stocks set to open flat; Nike's update eyed

U.S. stocks are set to open mixed again, with the pre-holiday mood becoming ever more apparent as the year drags to its end.

By 6:25 AM ET (1125 GMT), Dow futures were up 13 points, less than 0.1%, while S&P 500 Futures and Nasdaq 100 futures were both flat.

Weekly jobless claims, the Philly Fed index and existing home sales head the data calendar, while Accenture, Darden Restaurants and ConAgra are all due to report earnings before the open. The day’s biggest update, however, will come from Nike after the closing bell.

3. Micron's calling a bottom for memory chips

Chipmaker Micron (NASDAQ:MU) said the current quarter is likely to represent the bottom of the current cycle for memory chips, adding to hopes that the industry is turning a corner after suffering badly from the slowdown in China this year.

Micron’s stock rose 4.6% to a five-month high in after-hours trading, as the market looked beyond a fifth straight quarter of double-digit revenue declines that have crushed operating profit.

Elsewhere in the chip world, the Wall Street Journal reported that Broadcom (NASDAQ:AVGO) is looking to sell one of its wireless chip units in a deal that the WSJ said could fetch $10 billion. The company had said last week it would put wireless chips on a “standalone” basis outside its core operations

4. Bank of England to look through year-end slowdown

The Bank of England holds its first policy meeting since the general election, followed by Governor Mark Carney's press conference. Attention will be on whether the Bank looks beyond a string of extremely weak data readings in the last week which have spanned the housing market, construction sector, manufacturing and, earlier on Thursday, retail sales.

All those data pointed to businesses and consumer becoming more pessimistic ahead of the election, against a backdrop of prolonged uncertainty over the direction of Brexit. The Monetary Policy Committee will have to decide whether or not the withdrawal of the U.K. from the EU at the end of January will require more monetary stimulus. Analysts expect the MPC to remain split 7-2 in favor of holding the key rate at 0.75%.

5. Sweden ends the negative rates experiment, but other central banks are still cutting

There has, however, already been movement in other central bank rates Thursday. Sweden’s Riksbank voted to end its experiment with negative interest rates, raising its key rate from -0.25% to 0% on the grounds that inflation was close enough to target to justify the step. The bank has been worried that excessively low rates were fueling a housing bubble and household indebtedness.

Sweden follows Norway in raising rates this year, but those two are the conspicuous standouts in a global trend that is still towards easier policy. The Bank of Mexico is expected to cut its key rate when it meets later Thursday, a move made possible by the peso’s sustained strength against the dollar so far this year. Brazil, Russia, Turkey and India have also cut in the last couple of weeks.

The Bank of Japan, meanwhile, kept its policy unchanged at its meeting overnight.

Top 5 Things to Watch on Thursday, Dec. 19

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