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Good morning. A no-deal Brexit has been blocked, trade negotiation progress is mixed and there is speculation about consolidation in Europe’s financial industry. Here’s what’s moving markets.
A New Default
Parliament voted to block a no-deal Brexit, sending the pound higher by removing at least some of the jitters around that risk. Early signals are that the peacemaking attempt by Prime Minister Theresa May to reach out to Labour’s Jeremy Corbyn went well and that more talks are expected to happen. Any way forward will be welcomed. Data on the U.K.’s dominant services sector this week showed an unexpected contraction blamed on a Brexit-induced malaise, ministers are resigning at pace and even the BBC has triggered its contingency plan.
All eyes are trained on the trade negotiations between the U.S. and China, which are said to be going well, but ignore relations between the U.S. and Europe at your peril. EU ambassadors are said to have put off giving a mandate to start trade talks as France is continuing to withhold its consent. That could change in coming days, but it adds another layer of uncertainty to an already fraught situation for a European automotive industry already facing significant threats on the trade front.
M&A speculation is rife through the European financial sector. Swiss bank UBS Group AG is said to be considering options for its asset management arm, including potentially merging it with Deutsche Bank AG’s DWS Group and then combining the pair into a separate spin-out. DWS, by the way, has already reportedly attracted the attention of Allianz AG. Deutsche Bank’s plate is already full and Commerzbank AG, its possible partner, is set to decide next week on whether to intensify those talks.
Oil has been steadily heading higher this year but sputtered a little on Wednesday as U.S. crude inventories and output spoiled a rally driven by OPEC supply cuts, though this could well return. Crude isn’t the only place to find rising prices. Theories are still circulating about what drove this week’s Bitcoin rally, tech stocks haven taken only 100 days to erase the worst selloff of the bull market, iron ore has been on a tear since a Brazilian tailings dam disaster in late January and threats about closing the U.S.-Mexican border have sent avocado prices through the roof.
Stocks in Asia were mixed overnight and European stock futures are pointing to a lower open after the rally on Wednesday. Given the slew of terrible data releases in Europe in the past few weeks, even if there was a glimmer of hope on Wednesday, German factory orders will be pored over with zeal. Watch for comments from more Federal Reserve speakers in the shape of Patrick Harker and Loretta Mester and note Tesla Inc.’s Elon Musk faces a court hearing concerning his tweeting.
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours.
- The Fed risks stoking asset bubbles with its inflation focus.
- U.S. billionaires are living longer and making their heirs wait.
- An economist walks into a brothel.
- Do not use the wrong ship fuel in Singapore.
- Patagonia is cracking down on the de facto Wall Street uniform.
- Japan has a crypto unicorn.
- How sitting impacts your health. Spoiler: it’s not great.
©2019 Bloomberg L.P.