10 things you need to know in markets August 2

Tourists
walk past giant hand structure on the Gold Bridge on Ba Na hill
near Danang City, Vietnam August 1, 2018.

REUTERS/Kham

Good morning! Here’s what you need to know in markets on
Thursday.

1.
Chinese stocks are getting hosed amid the threat of higher US
tariffs on Chinese imports, as well as the potential for further
property market restrictions. China’s Shangai
Composite is down 2.5% at the time of writing (7.17 a.m. BST/2.17
a.m. ET). Elsewhere in Asia, Japan’s Nikkei stock index closed
down 1.07% and the Hong Kong Hang Seng is down 2.5% at the time
of writing.

2.
President Donald Trump could be about to double down on the next
phase of the trade war with China. Senior
administration officials told reporters Wednesday that Trump
asked the US Trade Representative to explore the possibility of
imposing a 25% tariff on $200 billion worth of Chinese imports to
the US. The original proposal proposed hitting the same amount of
goods with a 10% tariff.

3.
Barclays’ second-quarter pretax profits almost trebled compared
with a year ago, the lender said on Thursday, beating analysts’
expectations as it avoided the heavy restructuring and legal
costs that blighted past results. Reuters reports
that Barclays made a pre-tax profit of £1.9 billion for the three
months from April-June, up from £659 million a year ago.

4.
The Federal Reserve announced Wednesday that it decided during a
two-day policy meeting to keep its key interest rate
unchanged. Traders had widely expected this
decision, anticipating that the Fed would raise the benchmark for
borrowing costs two more times this year including next month.

5.
The Bank of England is set to hike interest rates for just the
second time since the financial crisis later on
Thursday. Markets are pricing a more than 90% chance
of a hike but UBS strategist John Wraith says a hike at 12 p.m.
BST (7.00 a.m. ET) today is an “unnecessary risk.”

6.
British engine-maker Rolls-Royce said that its 2018 results would
come in at the upper half of its guidance range after its civil
aerospace and power systems businesses posted a stronger than
expected first-half performance. Reuters reports
that the upgrade to guidance comes despite the company being
under pressure to fix problems with its Trent 1000 engine which
powers the Boeing 787.

7.
Aviva said it was on track to hit its target of 5% growth this
year, despite a fall in first-half profits. The
Financial Times said that the insurer reported operating profits
of £1.44 billion, down 2% on last year.

8.
Following the February stock market correction, tight market
liquidity was largely looked at as a symptom rather than a
cause. A new study from Goldman Sachs throws that
into question, arguing that constrained liquidity conditions
actually helped cause and worsen the sell-off.

9.
Tesla on Wednesday reported second-quarter losses that were
greater than Wall Street’s expectations. Shares
dipped immediately after the release, before rallying back into
the green in after-hours trading.

10.
Global manufacturing is plagued by increasing supply-chain
bottlenecks, cost pressures, and weakening demand from abroad,
leading to a slowdown in production levels and slower hiring
levels. IHS Markit’s Global Manufacturing PMI,
produced in conjunction with JP Morgan, fell to 52.7 last month
after seasonal adjustments, down marginally from 53.0 in June.