By Geoffrey Smith
Investing.com -- Donald Trump is almost in the departure lounge, China orchestrates the world's biggest-ever trade deal, Stocks are set to rise as Moderna (NASDAQ:MRNA)'s vaccine news allows investors to look through more shocking numbers of Covid-19 spread through the U.S. at the weekend. PNC Financial (NYSE:PNC) buys BBVA (MC:BBVA)'s U.S. operations, while Simon Property (NYSE:SPG) forces rival mall operator Taubman to accept a lower price. Here's what you need to know in financial markets on Monday, November 16th.
1. Trump nearly admits election defeat
President Donald Trump edged closer to acknowledging defeat in the U.S. election, although he recanted what appeared to be a concession via Twitter after thinking better of it on his way to the golf course.
Trump’s refusal to release the funds and authorizations usual to the post-election transition process have angered Democrats and increasingly irritated Republicans, who have warned of the national security issues at stake.
The power vacuum in the federal administration also threatens to further weaken the response to the Covid-19 pandemic, which continues to notch new records for new cases and hospitalizations at the weekend.
The number of those hospitalized with Covid-19 was just under 70,000 on Sunday, more than double its level of eight weeks ago. The overall number of confirmed cases in the U.S. has gone from 9 million to 11 million in only two weeks. An average of 1,321 Americans died every day from the disease last week, the highest rate since August. In better news, Moderna said early-stage data suggest its experimental Covid-19 vaccine is 94.5% effective in preventing infection.
2. China orchestrates massive Asia trade deal
China finally corralled 14 other countries across the Asia-Pacific region into what is the world’s biggest trade agreement at the weekend, underlining the scale of the task that President-elect Joe Biden will have in reasserting U.S. leadership of the global economy.
The “Regional Comprehensive Economic Partnership” doesn’t include the whole region, and is far from comprehensive, but it does at least lower tariffs on trade in a broad range of goods, something that’s likely to cement China’s dominance of the Asian economy.
Japan, South Korea, Singapore, Australia and New Zealand are all signatories to the deal, which covers one-third of the world’s population and one-third of its GDP.
3. Stocks set to open higher.
U.S. stock markets are set to open higher, as investors remain willing to look through the short-term surge in Covid cases and focus on the prospect of vaccines becoming available in the new year to help.
By 6:30 AM ET (1130 GMT), Dow 30 futures were up 277 points, or 0.9%, while S&P 500 futures were up 0.8% and Nasdaq futures were up 0.6%.
Overnight, Chinese markets had closed with gains of around 1%, lifted by the RCEP news and by figures showing industrial production growth stayed at 6.9% on the year in October, better than expected. Retail sales growth accelerated to 4.3%, but fell short of expectations.
European stock markets also gained on the same factors, and on hopes that this week will finally see a deal to ensure that the post-Brexit transition period with the U.K. ends in an orderly fashion on Jan. 1.
4. PNC buys BBVA's U.S. ops for $11.6 billion
PNC Financial bought the U.S. assets of Spain’s second-largest bank BBVA for $11.6 billion, the second-biggest banking deal in the U.S. since the collapse of Lehman Brothers in 2008.
The deal will open up big markets in the south and south-west for North Carolina-based PNC and will make it the U.S.’s fifth-biggest by assets, with over $500 billion in total. That still leaves it less than half the size of JPMorgan, Bank of America (NYSE:BAC), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC), however. PNC is redeploying almost all the funds it got from the sale of its stake in Blackrock (NYSE:BLK) earlier this year.
BBVA’s share price rose 15% on the news, the deal illustrating the value in a stock that has been hit hard by the pandemic this year. The news also pushed up the price of Banco de Sabadell up by 15%, as the local market anticipated that BBVA would use the money to bulk up in its domestic market, where it is set to lose the number 2 slot because of the planned merger of CaixaBank and Bankia.
5. Mall together now
Simon Property (NYSE:SPG), the U.S.’s biggest operator of shopping malls, persuaded its takeover target Taubman (NYSE:TCO) to accept a lower price, allowing the consolidation of the mall sector to proceed.
Under the new terms, Simon will pay Taubman shareholders $43 a share, down from an originally agreed price of $52.50.
It’s the latest big M&A deal to be revised as a result of the pandemic, after LVMH (PA:LVMH) squeezed a 2.6% discount out of Tiffany (NYSE:TIF) management last month. It comes at a time when Pfizer’s announcement that its experimental drug for Covid-19 had rekindled hope for the battered bricks—and—mortar retail sector.