Daily Scan: China rules the markets, even on a day off

Updated throughout the day

September 2

Good morning.  We present you with the China edition of the Daily Scan. These days, China rules the U.S. and European markets almost more than local data. That should make for an interesting Federal Reserve policy meeting later this month. Still, it is jobs’ weeks and let’s gather up some energy to pay attention to what’s going on in our own back yard. U.S. stocks were climbing their way back up Wednesday morning after falling Tuesday. The Dow and Nasdaq both gained about 1% by midday. The S&P 500 climbed 0.76%. The initial ADP report shows that businesses added 190,000 jobs in August, falling short of the expectations of 215,000 jobs added. Factory orders are up for the second straight month, boosting manufacturing 0.4%. Crude oil inventories grew by 4.7 million barrels last week. U.S. crude imports were up by 656,000 barrels/day. Also on the calendar: the Fed’s Beige Book report on how different economic districts are faring (2 p.m.).

Here’s what else you need to know:

Chinese naval ships off Alaskan coast. Three Chinese combat ships, a replenishment vessel, and an amphibious ship moving toward the Aleutian Islands. It’s the first time Chinese ships have been spotted in the area. Wall Street Journal

Hillz wins Puerto Rican support. New York City Council Speaker Melissa Mark-Viverito has endorsed Clinton for president, ahead of Clinton’s first trip to Puerto Rico this weekend. Clinton supports the island declaring bankruptcy and restructuring its $58 million debt. CNN

Obama winning Iran deal. Maryland Democratic Senator Barbara Mikulski is backing President Obama’s nuclear deal with Iran. Mikulski is the 34th vote, making it impossible for the GOP to kill the deal in Congress. Politico

Lego is world’s biggest toy maker. The Danish Lego had a 23% sales increase for the first half of 2015, while Mattel was hit with a 5% drop. “The Lego Movie” as well as special sets for Star Wars, Jurassic Park, and others have boosted the toy maker to world domination. Financial Times (paywall)

Trouble ahead? China cracks down on “grey market” margin lending. Beijing is putting the kibosh on the non-bank market, estimated to be 1 trillion yuan ($160 billion). The goal may be to stop stock manipulation but the result could be a liquidity crisis. Reuters (h/t Quartz)

Beijing wouldn’t let the stock market rain on its parade. That parade, of course, has long been in the making to mark the end of World War II. A stock market slump just wouldn’t do. So Beijing worked its magic, turning a 4.7% collase on the Shanghai Composite into a 0.2% barely-there loss. Ditto the more volatile Shenzhen Composite, which trimmed its 4.8% drop to down 1.98%. Hong Kong’s Hang Seng Index and Japan’s Nikkei Average meanwhile, slipped 1.18% and 0.39% respectively.

China sharpens the competition to the World Bank. Sources say the Asian Infrastructure Investment Bank will not ask borrowers to privatize or deregulate — unlike the World Bank. The White House has opposed the creation of the AIIB. Now, that was effective. Reuters/Quartz

One more from China: Currency controls. The country that claims to love free-market forces when all is going well is about to launch currency controls. The central bank will make it pricier for investors to push the yuan down against the U.S. dollar. Major lenders are clamping down on big customers and the regulators are working on ending illegal money-transfer agents. Foreign reserves are shrinking. Wall Street Journal (paywall)

Europe, U.S. looking up after dismal performance Tuesday. Most market indices are up about 0.5%. The Dow tumbled 3% in the previous session.

“I am not sorry,” says North Korea. The hermit state has denied  Seoul’s claims that Pyongyang’s recent expression of “regret” after a marathon negotiations amounted to an apology for a land-mine explosion that maimed two South Korean soldiers. Japan Times

U.K. construction hits longest growth period. The U.K.’s construction sector notched up its 90^th month of growth today as the Markit/CIPS UK Construction PMI came in at 57.3 for August. The reading is slightly higher than July’s 57.1 showing and, as Markit notes, is well above the 50 threshold separating contraction from expansion. Markit

Argentina calls for the head of HSBC chief. Argentina’s central bank has ordered HSBC to replace its chief executive in the country within 24 hours, accusing the bank of failing to prevent tax evasion and money laundering. The bank was accused of helping clients hide money in Swiss bank accounts. BBC

Streaming service Netflix launches in Japan. Netflix has partnered with Japanese mobile carrier SoftBank in a joint bid to tap some 36 million households with high-speed Internet access as part of global push. Channel News Asia

 Thailand arrests “main” bombing suspect. Police hunting those responsible for the shrine bombing that killed 20 people in central Bangkok two weeks ago arrested a second foreign suspect on Tuesday, Prime Minister Prayuth Chan-ocha describes the man as the main person in the bombing. South China Morning Post (paywall)

Photo: Yvan Yenda Ilunga