Five Things You Need to Know to Start Your Day
Good morning. The U.S. government appears to be barreling towards another shutdown, the U.K. is likely to see another delay for the next Brexit vote and Spanish politics is at the start of what’s likely to be a busy and important week for its socialist government. Here's what could move European markets today.
U.S. President Donald Trump says the wall on the Mexican border is coming “ one way or the other” and it appears congressional talks on reaching a budget agreement have broken down, raising the potential that the federal government will shut down once again at the end of this week. The previous shutdown ultimately had little market impact but the extra disruption and the lack of any visibility on when this could end may well raise jitters.
U.K. Prime Minister Theresa May is said to be planning to ask Parliament for more time to continue negotiations with the European Union on possible tweaks to her Brexit deal, meaning the vote scheduled for Valentine’s Day could be shelved. She’s also seeking to play nice and offer further talks with Labour Party leader Jeremy Corbyn. Meanwhile, economists say there is nearly a one-in-three chance the U.K. will sink into recession in the next year, British and American banks are divided on the issue and a company with no ferries awarded a ferry contract has lost that contract.
Spain’s Big Week
Spanish political risk is back on the agenda too, with thousands taking to the streets in Madrid to demand early elections and Prime Minister Pedro Sanchez facing pressure from his legislative allies ahead of key budget vote on Wednesday. All this comes as the trials of pro-independence Catalan leaders start and the country experiments with a big hike to its minimum wage. Note too that Italy held regional elections, pitting its populist partners against each other.
Back to Work in Asia
Asian markets returned after the Lunar New Year celebrations in a mixed mood, with the appetite for risk assets being sapped by concerns over global growth and trade talks between the U.S. and China. Oil prices slipped on those growth worries and iron ore futures surged again in China as the market there returned and ripples from the Vale SA disaster in Brazil continued to be felt. European stock futures look slightly positive after the dip back on Friday.
U.K. GDP and industrial production data are due along with some credit data from China. Otherwise, look for pointers to events later in the week including U.S. trade representatives heading for Beijing for more talks, a meeting of euro area finance ministers, budget debates in Spain, OPEC’s monthly oil market report, a NATO meeting in Brussels and a central bank decision from Sweden.
What We’ve Been Reading
This is what’s caught our eye over the weekend
- Active managers are feeling vindicated by the money pouring out of passive funds
- Moscow points to the future of car-sharing and car manufacturers should be scared
- Hungary has launched a range of subsidies designed to increase the country's fertility rate
- Finland’s basic income experiment did not help those involved find jobs
- Global oil trading is being put in the spotlight by the fall of the fugitive “Batman”
- There is now a Tinder-style service for cow breeding
- The battle for gender equality in big wave surfing
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