Five Things You Need to Know to Start Your Day

(Bloomberg) --

Brexit gets a deadline extension, Australia’s election date is announced and the Fed shows some rate flexibility. Here are some of the things people in markets are talking about.

Brexit Delayed

EU leaders have reached a compromise deal to extend the Brexit deadline to the end of October with a review in June. That deadline means the U.K. leaves Europe before the next EU Commission takes office, limiting London's entanglement in the next phase of European business. But it’s longer than Theresa May wanted and there’s a risk she faces a backlash when she takes the deal home. It also potentially sets up a political crisis in the U.K. for later this year. As most European Union leaders sought to gently maneuver the U.K. into postponing Brexit at their meeting in Brussels, only one broke ranks — French President Emmanuel Macron.

Australia’s Election Called

Prime Minister Scott Morrison called Australia’s election for May 18, with polls showing he’s facing an uphill battle to prevent a shift in power to the left-leaning opposition Labor party.  The five-week campaign will be dominated by the stark policy differences between Labor and his Liberal-National coalition, which is vying for a third straight term. They include everything from cutting taxes to boosting wages to reducing emissions in one of the world’s worst per-capita polluters. The coalition government goes into the contest as the underdog, with its six years in power tainted by policy stagnation and infighting that’s seen it twice switch leaders. Here’s a rundown of the pledges and policies that will decide who wins government. 

Stocks Rebound 

The S&P 500 rebounded from its first loss in nine days, while Treasuries held gains after Federal Reserve meeting minutes confirmed the central bank’s dovish tilt on policy this year. Tech shares paced the advance, boosting the Nasdaq indexes. Boeing continued its slide in the wake of the 737 Max fallout, helping to hold down the Dow Jones Industrial Average. The dollar slid against the euro after European Central Bank President Mario Draghi reiterated warnings that global risks continue to batter the region’s economy as the ECB signaled no rate hikes for the rest of 2019. The pound advanced as European Union leaders met in Brussels to hash out the terms of a Brexit delay.

Fed Flexibility

Federal Reserve officials signaled on Wednesday they’re prepared to move interest rates higher or lower as needed, but an unusual mix of risks means they could remain on hold all year. Despite an economy that is forecast to grow above trend with low unemployment, policy makers are worried about external drags such as slowing European growth, the potential of a disruptive Brexit and the ongoing Trump trade war. Domestically, they are concerned about an inflation rate that is decelerating despite a labor market that is below their estimates of full employment. The result is an interest-rate policy that is on hold and might remain so even if some of these risks resolve into a more optimistic outlook. That’s basically the message in the minutes of the Federal Open Market Committee’s March 19-20 policy meeting released in Washington.

Enforcement Agreement 

The U.S. and China have agreed to open “enforcement offices” as a way to make sure each side lives up to the terms of a trade deal still under negotiation, Treasury Secretary Steve Mnuchin said Wednesday. “We’ve pretty much agreed on an enforcement mechanism,” Mnuchin said on CNBC. “We’ve agreed that both sides will establish enforcement offices that will deal with the ongoing matters. So this is something that both sides are taking very seriously.” President Donald Trump has said the two sides are nearing a trade deal after recent high-level meetings in Beijing and Washington. Officials are discussing text of an agreement that would cover technology transfers, intellectual property protections, non-tariff measures, services, agriculture, trade balance and enforcement, according to China’s state-run Xinhua.

What we’ve been reading

This is what caught our eye over the last 24 hours.

• Australian stocks are defying the odds. 
• One of Singapore's best-known entrepreneurs is in trouble.
• Has Narendra Modi really changed India?
• Thousands of Amazon workers are listening to what you tell Alexa.
• Nomura's latest attempt at a revamp is falling flat.
• SoftBank’s two Uber board seats at risk on U.S. security review.
• Vintage Porsche collection damaged in fatal gas explosion.
• Crypto coin sales are staging a revival.

To contact the editor responsible for this story: Boris Korby at bkorby1@bloomberg.net

©2019 Bloomberg L.P.