5 things you need to know before the markets open in Australia and around the world.
1. Samsung Unveil Galaxy S10 Lineup Including Foldable Phones and 5G
This week Samsung announced its new lineup of Galaxy S10 smartphones at its “Unpacked” press event in San Francisco. The electronics giant is aiming to respond to a year of slower sales growth by launching innovative new features ahead of its rivals, providing more distinction from its earlier models.
Samsung began their event by debuting the Galaxy Fold, a 4.6-inch smartphone that opens up into a 7.3-inch tablet. The hinge system has been designed so that it can’t be seen from the outside, and has been tested to ensure that it lasts hundreds of thousands of repeated openings and closings. The device was described as a luxury item and will cost $1,980 on its April 26 launch date.
The company is trying to offer a more differentiated product after last year’s Galaxy S9 unveiling provided such little difference to the Galaxy S8 that sales were stunted. However, the audience met the price reveal of the Galaxy Fold with groans, suggesting that few would be able to afford this latest piece of technology.
Samsung also updated its flagship Galaxy S range, with four new options including a 5.8-inch S10e ($749); the 6.1-inch Galaxy S10 ($899); the 6.4-inch S10+ ($999) and the 6.4-inch S10 5G (pricing to be announced). The latter three devices include a new curved, quad HD+ AMOLED display, which promises to provide crisper, more vibrant colors and reduces blue light exposure to lessen eyestrain.
The S10 5G model is the first mainstream device that can run on the new 5G wireless networks due to launch later this year. While this could give Samsung a head start, it is not yet clear whether customers will be happy to shell out extra money for access to a technology that has yet to be launched and proved.
2. What are the Latest Scenarios on Brexit?
Last week the UK House of Commons returned to debate the government’s response to the historic rejection of Theresa May’s Brexit deal on 15 January. In a largely symbolic vote, parliament voted against the direction of the government’s negotiations since that defeat. As senior EU politicians state they will not reopen the legal text of the contentious withdrawal agreement, where does each side go from here?
An oft-touted tactic by hardline Brexiteers is the ‘No deal’ option. This would see the UK leave the EU without a deal and likely default to World Trading Organization trading rules. A majority of MPs have already indicated they are against this scenario, so it currently seems unlikely.
The government could also choose to negotiate an entirely new Brexit agreement. This would almost certainly require an extension of Article 50 in order to delay the Brexit date of 29 March 2019. If the EU refuse an extension, then the government will have to try another option.
The UK government may also choose to hold another referendum, which could have the same status as the one launched in 2016 – i.e. a legal, non-binding and advisory referendum. This would likely also require an extension to Article 50 due to the limited time before 29 March.
As confusion reigns, Theresa May might also choose to call a general election, with the hope that she can get a political mandate for her deal. This power doesn’t simply lie with her office – MPs would have to be asked to vote for an early election, with two-thirds of all MPs required to support the move. As this would be 25 working days after support is given, this would likely also require an extension to Article 50.
Finally, the UK could even unilaterally revoke Article 50 to cancel Brexit. With the government currently fully committed to seeing this through, this option would require a fundamental or rapid shift in UK politics to actually take place.
3. Multiple Memorandums Expected from US and China on Trade Deal
US and Chinese negotiators were this week working on multiple memorandums of understanding intended to form the basis of a final trade deal, according to an insider. These are expected to cover areas including agriculture, services, technology transfer, intellectual property, and non-tariff barriers.
This week’s talks are unlikely to see breakthrough on any major structural issues, but work is seemingly underway to extend the March 1 deadline for US tariffs to rise on Chinese goods. China’s chief negotiator, Lie He, is currently due to meet US President Donald Trump on Friday.
The US administration is pushing for what it deems to be ‘fair and reciprocal trade’. This includes a request for China to keep the value of the yuan at stable levels, neutralizing any Beijing-led efforts to devalue their currency to counter US tariffs.
China is offering increased purchases of US products in order to shrink the trade deficit. The offers have so far included agricultural and energy products.
A more contentious area of the dispute is that of technology transfer and protection of US intellectual property. The US has accused China of stealing US research to advance its own development, along with forcing US firms to give their technology to Chinese firms in order to gain access to the market. China denies the theft and has started debating a law to make the practice of providing technology for access illegal.
4. New Delays for US Space Program Threatened By Space X, Boeing Design Risks
Space X and Boeing Co this week received a warning from NASA on design and safety concerns for their competing launch systems for astronauts, according to industry insiders. The warnings threaten the US bid to revive its human spaceflight program later this year.
NASA has agreed to pay SpaceX $2.6 billion and Boeing $4.2 billion in order to build rocket and capsule launch systems that can send astronauts to the International Space Station from US soil for the first time since 2011.
With the first scheduled un-manned test flight set for March 2, NASA’s safety advisory panel identified four “key risk items” in its 2018 annual report, revealed earlier this month.
For Boeing, this includes the structural vulnerability of the capsule when the heat shield is deployed. For SpaceX, the report flagged the redesign of a SpaceX rocket canister that exploded in 2016, and its “load and go” process of providing fuel for the rocket with the crew already in the capsule. “Parachute performance” was an issue for both of the commercial space companies.
NASA update their risk database routinely during their stringent certification process. This includes data collection, tests, and collaboration with each company. Each of the company’s systems has been delayed several times in recent years already – common for a sector operating in a multibillion-dollar, complex spacecraft environment.
The US currently pays Russia around $80 million per ticket for a trip to the International Space Station. Given production schedules and other factors, there are no seats allocated to US crew on the Russia spacecraft after 2019. NASA said it was considering paying for two more seats this fall and spring 2020 to ensure US access.
5. Glencore’s New Coal Production Cap is a Comfortably Loose Fit
The Australian coal sector’s response to Glencore’s concession on carbon has ranged from cynical ambivalence to real anger. On the former side, it is seen as a cleverly constructed and self-serving response to the climate change lobby. The angry, on the other hand, add to this position a frustration that this concession comes at the wrong political moment, where discussion around the future of Australian coal is at a peak.
A real concern now exists that Glencore’s internally harmless move will allow a well-funded anti-coal lobby to thrive in its efforts. “This screws every other major provider in Australia, from a development point of view,” a coal industry worker told the Financial Review.
In reality, the new coal production cap is flexible and based on as-yet unrealized production levels. Glencore have not stated the exact size of the cap, with the official statement referring to production capacity “broadly” at current levels. As of this week, this was assumed to be about 145 million tons a year across operations in Australia, South Africa and Colombia.
By making this statement, Glencore has managed to temporarily subdue a powerful climate activist group, send a clear market signal about future production levels, and allowed it to make the most of its coal estate.
However the company is still free to develop new mines, buy out partners in joint ventures, and build new mines. As the company statement said, “Glencore has been very clear that we closely consider market conditions before bringing on new coal projects as they need to be economically sustainable over a long period”.