Top 5 Things to Know in the Market on Monday

Investing.com -- An anti-climactic weekend for Brexit, more happy talk on the U.S.-China trade dispute and some decidedly less happy talk from regulators with regard to Boeing's 737 MAX and Facebook's Libra project. Here's what you need to know in financial markets on Monday, 21st October.

1. U.S., China talk up chances of temporary trade deal

U.S. and Chinese officials continued to make encouraging noises about the prospect of sealing an interim trade truce by mid-November to take the edge off the two countries’ wide-ranging dispute.

President Trump expressed confidence that the so-called “phase-1” agreement that would stop the introduction of further tariffs and commit China to buying some $50 billion a year in U.S. agricultural produce would be ready for signing when he and his counterpart Xi Jinping meet at the G20 leaders’ summit next month.

Separately, China’s top trade negotiator Liu He, in a rare public speech, said that “substantial progress” had been made and added that “stopping the escalation of the trade war benefits China, the U.S and the whole world. It’s what producers and consumers alike are hoping for.”

2. Johnson requests Brexit deadline extension

Those waiting for a resolution to the Brexit drama will have to wait a few more days. The government of Prime Minister Boris Johnson pulled out of a meaningful vote on the deal he brought back from Brussels when the House of Commons sat on Saturday, apparently out of concern that opposition lawmakers would tie unpalatable demands to it in the form of amendments.

Johnson, who doesn’t have a majority in the House of Commons, was forced to request an extension of the Oct. 31 Brexit deadline from the EU, which appears more likely than not to be granted (he didn't sign the letter himself and wrote a side letter distancing himself from the official one). That effectively nixes the chance of a disorderly No Deal scenario on Nov. 1. While it leaves the longer-term questions about the Brexit outcome unanswered, it’s enough to support the British pound and cause money to flow out of U.K. government bonds this morning.

3. Stocks set to open higher

U.S. stock markets are set to open slightly higher under the influence of the two factors above, albeit still within their recent ranges and with no obvious domestic catalyst due on Monday.

By 6 AM ET (1000 GMT), Dow futures were up 37 points or 0.1%, bouncing only slightly after the losses on Friday that were caused largely by Boeing (NYSE:BA) (see below). S&P 500 Futures were up 6 points or 0.2% and Nasdaq 100 futures were up a slightly more impressive 0.3%.

On the earnings front, Halliburton will be in focus after the massive writedown announced on Friday by rival oilfield services giant Schlumberger (NYSE:SLB). Also of interest may be TD Ameritrade, which will update on its outlook in the middle of an increasingly intense price war with other brokerage firms.

4. FAA demands answers on 737 MAX messages

The Federal Aviation Agency demanded an “immediate” explanation from Boeing (NYSE:BA) over an exchange of messages by test pilots back in 2016 showing concerns about the flight control software that has been blamed for two fatal crashes since.

“We understand entirely the scrutiny this matter is receiving, and are committed to working with investigative authorities and the U.S. Congress as they continue their investigations,” Boeing (NYSE:BA) said in a statement after a board meeting on Sunday.

Boeing (NYSE:BA) shares had fallen over 6.5% on Friday as the exchange, in which a senior test pilot complained of “egregious” action by the so-called MCAS software, became public. The incident adds to suspicions that production pressures led Boeing to compromise its safety culture – suspicions that led Boeing to strip CEO Dennis Muilenburg of his responsibilities as chairman last week.

5. Time to recaLIBRAte?

Facebook (NASDAQ:FB) appeared to retreat from its vision of launching a global digital currency after a highly sceptical report from global regulators.

David Marcus, the executive who is coordinating Facebook’s Libra initiative with 20 other partners, told a forum at the weekend that the company was open to creating a string of nationally-backed “stablecoins” rather than the single payments system backed by a basket of existing currencies.

Seven of the original 28 companies backing the Libra project pulled out earlier this month after pressure from regulators in the U.S. and Europe. A report by the G7 published on Friday warned that the project as designed represented potential threats to the international monetary system, as well as raising important antitrust and data privacy concerns.

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