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Friday 19 July: Five Things You Need to Know to Start Your Day

SEATTLE, WA - JUNE 27: Boeing 737 MAX airplanes are stored in an area adjacent to Boeing Field, on June 27, 2019 in Seattle, Washington. After a pair of crashes, the 737 MAX has been grounded by the FAA and other aviation agencies since March, 13, 2019. The FAA has reportedly found a new potential flaw in the Boeing 737 Max software update that was designed to improve safety. (Photo by Stephen Brashear/Getty Images)

The U.S. shot down an Iranian drone it said was threatening a warship in the Strait of Hormuz. Asian equities point higher after stocks ricocheted in the U.S. And trade talks between China and the U.S. are slowly crawling forward. Here are some of the things people in markets are talking about today.

Iranian Drone Destroyed

Donald Trump said the U.S. shot down and “immediately destroyed” an Iranian drone that approached the USS Boxer near the Strait of Hormuz. The drone “was threatening the safety of the ship and the ship’s crew,” the president said, adding that he’s calling “on other nations to protect their ships as they go through the Strait.”

Asian Stocks Pointing Higher

Asian futures were pointing to a positive open after U.S. stocks rebounded from early losses. The recovery was boosted by comments from New York Fed President John Williams, who highlighted the need for swift action should the economy stumble. The S&P 500 erased losses to close slightly higher, led by consumer and financial stocks, while 10-year Treasury yields fell. The dollar was weaker against all major peers, and gold was higher.

Trade Talks Inch Foward

U.S. Treasury Secretary Steven Mnuchin said he and Trade Representative Robert Lighthizer had a call scheduled later Thursday U.S. time with their Chinese counterparts, denying Huawei restrictions are a sticking point in trade talks. Mnuchin also said there’s no change in the U.S.’s dollar policy “as of now,” but wouldn’t rule out a shift in the future. His comments come as the Trump administration softens the long-held U.S. stance of supporting a strong dollar, instead favoring a stable exchange rate as it battles China in a trade war and threatens tariffs on other countries.

Max Fallout Worsens

Boeing’s 737 Max grounding has a price tag, and it’s a big one. The company plans to record a $4.9 billion charge related to the beleaguered jetliner when it reports results next week. The costs, equivalent to $8.74 a share, cover potential concessions for customers who have been forced to cancel flights and line up replacement aircraft after the March grounding. The charge will clip $5.6 billion from revenue and pretax earnings in the quarter.

Bringing Up the Rear

Morgan Stanley posted the worst trading slump on Wall Street. Equities revenue dropped 14% and fixed-income fell 18% in the second quarter, both missing estimates. Investment banking sales declined 13%, slightly less than expected. On the bright side: profit topped consensus and wealth management revenue unexpectedly jumped.

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Otsile Nkadimeng - photo by Thom Pierce

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