1. FinCEN Files send bank stocks tumbling
Leaked files from the U.S. Treasury’s Financial Crimes Enforcement Network showed that dozens of global banks had failed to monitor and prevent trillions of dollars of suspect payments passing through their systems over numerous years.
While much of the detail was largely historical, the dump nonetheless contained previously unpublished material that hit European bank stocks hard on Monday morning.
Barclays (LON:BARC), Deutsche Bank (DE:DBKGn) and ING (AS:INGA) were particularly hard hit, while HSBC not only figured prominently in the leaked files, but was also touted by the Chinese Global Times as being a likely candidate to be put on China’s official list of “unreliable entities”, which would expose it to the risk of damaging sanctions on its business in China.
2. Nikola chairman Milton steps down
Trevor Milton, the founder of electric truck-maker Nikola Corp (NASDAQ:NKLA), stepped down from his position as chairman, in the wake of fraud allegations that are now the subject of an investigation by the Securities and Exchanges Commission.
Milton will be replaced as chairman by Stephen Girsky, formerly vice-chairman of General Motors (NYSE:GM) and a current member of Nikola’s board. The news comes only two weeks after GM agreed to pay $2 billion for a 11% stake in Nikola and said it would partner with the company in making its Badger truck.
Nikola stock fell 28% in premarket trading while GM stock fell 3.9%.
3. WeChat ban halted; TikTok stays Chinese
A federal judge in California blocked President Donald Trump’s executive order that would have shut down the multi-app WeChat platform in the U.S. on first Amendment grounds. The move is a victory for its owner Tencent Holdings (OTC:TCEHY).
The Commerce Department meanwhile suspended the order that would have banned downloads of the video-streaming app TikTok, citing progress on hammering out a deal that would see Oracle (NYSE:ORCL) and Walmart (NYSE:WMT) become minority shareholders in its U.S. operations. Trump said on Saturday he approved such an arrangement.
ByteDance, TikTok’s Chinese owner, said it won’t transfer any technology to either company as part of the deal, undermining Trump’s claim that China would have “nothing to do” with TikTok in the U.S.
4. Stocks set to open sharply lower
U.S. stock markets are set to open sharply lower on Monday, weighed down by a cocktail of news, not least by suspicions that the death of Supreme Court justice Ruth Bader Ginsburg at the weekend will distract lawmakers from the urgent task of approving a new package of economic support measures.
Reports that the U.K. is about to impose new restrictions to bring a second wave of the Covid-19 virus under control (see below) were also a factor.
By 6:30 AM ET, Dow futures were down 534 points, or 1.9%, while the S&P 500 futures contract was down 1.6% and NASDAQ futures were down 1.3%.
While the Nikola news had no direct read-across for the rest of the market, it comes at a time when fears are spreading that tech stock valuations reaching unsustainable levels.
5. U.K. to announce new restrictions to tame virus
The U.K. government is reportedly set to announce new restrictions on public life to stem a sharp rise in Covid-19 cases.
The government’s chief scientific advisor Sir Patrick Vallance told a briefing that the U.K. faces 50,000 new cases a day by mid-October if new measures aren’t put in place now.
Chief medical advisor Andrew Whitty said meanwhile that the country was going “in the wrong direction.”
U.K. media reports suggest the government’s new measures will largely target the hospitality and transport sectors. They look set to frustrate the government’s other objectives of having more people to return to the workplace, and of phasing out the nationwide furlough scheme from October. Sterling fell 0.5% against the dollar in response.