Five Things You Need to Know to Start Your Day
Good morning. There are calls for unity on the Brexit process, spreading dovishness in European central banks, hopes for a trade deal and remember to wish American colleagues a happy President’s Day off work.
Here’s what’s moving markets this morning.
Plea for unity
U.K. Prime Minister Theresa May’s pleas have fallen on resolutely deaf ears in Parliament so far but it remains her focus to try to secure a united front at home to underpin attempts to rejig the Brexit deal with the European Union. May is pleading with lawmakers to put aside divisions for the good of the country, but that seems unlikely to change any minds based on the track record thus far. As she heads back to Brussels to plead for help in getting her deal through, supply stockpiling and preparations continue, the pound is creaking and there are calls for smaller EU nations to have a bigger say, something unlikely to help May get better nights of sleep.
The more dovish signals from the European Central Bank are piling up. Governing Council member Francois Villeroy de Galhau said the slowdown in the European economy is “significant” and the ECB may have to alter its interest rate guidance should the weakness not prove temporary. He echoed comments from Benoit Coeure, whose remarks about the potential for new long-term loans sent Europe’s bank-sector stocks, particularly the Italian contingent, soaring on Friday afternoon. Dovishness is infectious, it seems, and plenty of central banks will have speakers at various events around the world this week for observers seeking more clues on the way forward.
A central focus of the week will be how willing the U.S. and China ultimately prove to be in the aim of getting a trade deal done before the March 1 deadline for the temporary truce passes. U.S. President Donald Trump held talks with members of his trade delegation at the weekend and later said the talks had been “very productive”. Negotiators are set to meet again this week, so at least on the face of it, the will does seem to be there. Watch the automaker sector on the trade front too after Trump received a Commerce Department report on whether imported cars pose a security threat.
The potential for a further schism in the already tense relationship of Italy’s ruling populist parties will rear its head as Five Star takes part in an online vote to decide whether it should support immunity from prosecution of the League’s Matteo Salvini over refusing to let a migrant ship dock last year. A relationship breakdown has already happened in Spain, where the Socialist party has made some gains, but not enough for a majority and so it’s likely to be an uncertain, Catalonia-strewn road to elections in April. French President Emmanuel Macron's poll numbers also got a little better and his finance minister is bemoaning the impact of the Yellow Vest protests on the economy.
The U.S. markets are closed to celebrate President’s Day, so Europe’s got the stage to itself, albeit on a relatively quiet day. On the earnings front, consumer-goods behemoth Reckitt Benckiser Group Plc will update, with all eyes on its sales-growth numbers. Looking ahead, the Federal Reserve will publish minutes from its latest meeting on Wednesday and central bank speakers from across the globe will likely take center stage.
What We’ve Been Reading
This is what’s caught our eye over the weekend.
- U.K. lawmakers have recommended imposing harsher penalties on tech giants.
- Buying stocks is easy. Selling them is hard.
- Iceland's capital is awash with empty luxury flats.
- Bill Gates says the best way to tax the wealthy is to target capital gains.
- That time Brad Pitt tried to save the lower ninth ward in New Orleans.
- The boom of CBD products in the U.S. and the scant research done on its medical benefits.
- Is it possible for Syria to rebuild itself with Al-Assad still in charge?
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