UK PM May seeks pragmatic solution

Camilla Boldracchi, PhillipCapitalUK
04/Feb/2019 14:43

The GBP sunk as the EU continued to reject talks to renegotiate the Brexit deal. With the possibility of renegotiation relatively low, the current scenario seems to have halted to a deadlock. Adding pressure to the British Economy was Nissan’s decision to switch production of its new SUV model to Japan, something the UK government will be hoping is not followed by other firms. At Present, Prime Minister Theresa May is seeking a "pragmatic" solution. However, it may prove to be futile. The current deal took approximately one and a half years to negotiate, and renegotiation of a new deal will prove to be time consuming and tedious.


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Tags:   Brexit

Non-farm payroll preview

Andrew Hall , PhillipCapitalUK
01/Feb/2019 09:30

Non-farm payrolls are expected to be quite underwhelming after a bumper figure last time round with US employers adding the most workers in 10 months at +312,000, labour force participation jumped and wage gains improved, whilst unemployment rose to 3.9% up from a five-decade low. January’s NFP figure is forecast at +165,000, with the figure giving clues to the general state of the US economy and impact of the partial government shutdown. The unemployment rate and average hourly earnings (YoY) are set to remain unchanged at 3.9% and 3.2% respectively.


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Tags:   US NFP Unemployment.

Asian shares climb to four-and-a-half month high on Fed comments

Andrew Hall , PhillipCapitalUK
31/Jan/2019 08:59

Asian stocks soared to a four and a half month high on Thursday after the US Federal Reserve pledged to put interest rate rises on hold on increasing signs of slowing global growth. The move was in stark contrast to his hawkish outlook at the end of last year in when the Fed rose rates a quarter percentage point to 2.5%. “We believe we can best support the economy by being patient in evaluating the outlook before making any future adjustment to policy.” Jay Powell said. The MSCI’s broadest index of Asia-Pacific shares outside Japan climbed to its highest level since Oct 4, up +0.9%. Elsewhere we saw Hong Kong’s Hang Sang index rise +1.01%, with sharp gains in financial stocks. Whilst back on Wall Street, the Dow Jones and the Nasdaq rose +1.77% and +2.20% respectively on the developments with renewed hope the Fed’s pause will boost US economy and provide corporate profits with more room to run.


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Powell to emphasize patience on future rate rises

Andrew Hall , PhillipCapitalUK
30/Jan/2019 08:48

The Federal Reserve conclude their two-day meeting on Wednesday, in which officials are expected to keep rates unchanged at +2.5% after raising rates for a fourth time back in December 2018. The Fed has signalled that future rate rises will be data driven on a ‘wait and see’ basis, however with many economic data releases delayed due to the longest partial government shutdown in history, the Fed has limited data to go on. Markets have priced in two Fed rate hikes in 2019, with a dovish stance expected from the FOMC, this comes as the rumour mill suggests the Fed are considering tapering their ongoing asset-shedding operation, a move which will only increase concerns for an economic slowdown. Eyes will be fixated in Fed chairman Jay Powell’s post-meeting press conference with markets keen to assess his tone whilst looking for any sign that the recent hiking cycle has at least been paused.


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Tags:   US Fed FOMC Powell.

Brexit: MP's to vote on amendments

Andrew Hall , PhillipCapitalUK
29/Jan/2019 10:32

Today could be a defining one in the Brexit saga as the Commons debates various amendments to the withdrawal bill, the outcome will be pivotal to the future relationship the UK has with the EU, whilst also providing the PM with a mandate to take back to Brussels for negotiation. MP’s could end up asking for amendments to the Northern Irish border arrangements, looking for an extension to the leaving date or pursuing a customs union - quite what the outcome will be is still unclear and the press remains full of internal Conservative infighting this morning.


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Tags:   UK EU Brexit Parliament.

Brexit - The quiet before the storm

Andrew Hall , PhillipCapitalUK
28/Jan/2019 09:10

A kind of hush seems to have descended on the Brexit debate over the weekend with the main bone of contention being the possibility that MPs will have to put in longer hours and, horror of horrors, possibly miss their February "half-term". The quiet before the storm maybe? Debating begins this week on the various amendments designed to avert a no-deal scenario and a possible extension to exit process. Tory rebels seem to be offering olive branches, with BoJo suggesting a "freedom" clause would be enough to appease his band. Whilst back in the EU, chief Brexit negotiator Michel Barnier said EU leaders will need two questions to be answered before agreeing any extension to Article 50: "Why and how long?". Guy Verhofstadt, the European Parliament’s Brexit co-ordinator went further adding "It is clear on EU’s side that an extension will not be given as a blank cheque," "we need to be absolutely clear that there should be a ‘plan’ before agreeing to it."


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Euro falters as economic outlook moves to the downside

Andrew Hall , PhillipCapitalUK
25/Jan/2019 08:56

ECB President Mario Draghi faced up to the fact that the European economy is going through another rough patch yesterday, scuppering any thoughts that monetary tightening may be on the agenda sometime before he steps down in October. The ECB Bank Chief said that due to “persistent uncertainty relating to geopolitical factors and the threat of protectionism” risks have now “moved to the downside”, despite this Draghi insisted the bank had all of its “toolbox still available”. The euro slumped as a result pushing the pound to its highest level since mid-April, with the pound currently trading at €1.1559 after edging close to the €1.16 level in yesterday’s trading.


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Article 50 delay talk boosts the pound

Andrew Hall , PhillipCapitalUK
24/Jan/2019 09:17

The talk for a delay of the Article 50 leaving date seems to be gathering pace and some of the market fear factor with regards to the currency continues to unwind as a result - against the euro, the pound currently stands at 1.1472. The political saga continues to rumble on with markets awaiting further development from the UK as PM Theresa meets with union leaders later today to discuss her Brexit plan; whilst over in Davos, Chancellor of the Exchequer, Phillip Hammond will urge business to invest in post-Brexit Britain arguing that “Britain is a great place to do business”.


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BoJ cuts inflation forecast, leaves stimulus unchanged

Andrew Hall, PhillipCapitalUK
23/Jan/2019 09:07

The Bank of Japan cut their inflation forecast at their monetary policy meeting on Wednesday citing increasing risks to the economy from falling global demand, halting policy makers’ year-long efforts to achieve durable growth. The yen slid as a result, trading -0.24% against the pound. The BoJ maintained their ultra-loose monetary policy, keeping their short-term interest rate at -0.1% and pledging to steer 10-year government bond yields around 0%. Concern at the BoJ remains high, with the US-China trade war, a potential ‘hard’ Brexit and a slowdown in China's economy taking its toll on a export driven economy, “If the China-U.S. economic friction, trade friction becomes prolonged, it’s clear that we will see the impact from that," Governor of the BoJ, Kuroda said. "I sincerely hope that they’ll get this resolved quickly."


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World Economic Forum: Davos 2019

Andrew Hall , PhillipCapitalUK
22/Jan/2019 09:28

The World Economic Forum in Davos, Switzerland gets underway today and to what better back drop than when the IMF slashes its global expansion forecast this year from +3.7% to +3.5%, warning global trade tensions will curtail future growth prospects - the world’s top political, business and cultural leaders scheduled to attend the event certainly have a lot to discuss. Concerns are perhaps felt heaviest in China, with President Xi Jinping emphasising the need for greater efforts from the Communist Party “to prevent and resolve major risks”. US President Trump will miss the event due to the ongoing partial government shutdown, which currently shows no sign of ending anytime soon, with the vote to reopen the government this week only expected to expose the gulf between the two parties. UK PM Theresa May will also be a notably absentee, with her Brexit deal taking precedence. Consequently China’s vice-president Wang Qishan will be able to convey his countries case without challenge from the US, no doubt much to his relief.


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China's economic growth cools in fourth-quarter

Andrew Hall , PhillipCapitalUK
21/Jan/2019 08:49

China’s economic growth slowed at its weakest pace since 2009 as trade tariff woes and falling domestic demand bite. China has introduced a wave of fiscal and monetary stimulus since July to reverse the deceleration, with the Finance Minister last week laying out plans for additional tax cuts. Full year growth stands at +6.6% down from +6.8% for 2017, whilst Q4 growth fell to 6.4%.


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Tags:   China GDP Q4 Liu Kun.

Asian shares higher on growing optimism for US-China trade deal

Andrew Hall , PhillipCapitalUK
18/Jan/2019 09:01

Asian shares traded broadly higher on reports on progress in US-China trade negotiations, stirring market optimism and raising hopes a deal can still be reached between the world’s two largest economies. US media reported that U.S. Treasury Secretary Steven Mnuchin openly discussed the option of lifting tariffs imposed on Chinese imports, and even rolling tariffs back during the scheduled trade negotiations on Jan 30. The MSCI’s broadest index of Asia-Pacific shares outside Japan gained +0.55%, with the index closing up 1.3% for the week. Elsewhere, Hong Kong’s Hang Seng index climbed +1.25%, whilst down under the ASX 200 edged +0.50% higher.


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The government lives to fight another day

Andrew Hall, PhillipCapitalUK
17/Jan/2019 08:55

The government lives to fight another day after PM Theresa May survived a vote of confidence thanks to the backing of the 10 members of the DUP, while we still have no solution in sight to Brexit, and Labour leader Corbyn still sees the chance of a no-deal Brexit but the market is pretty sanguine to this possibility. Sterling remains at its recent higher range this morning despite the leader of the opposition refusing to enter into cross-party discussions until the threat of a no-deal is taken off the table - does he really believe this to be a possibility or is this just political posturing? However, maybe there is a no-deal twist still to come. German industry chiefs called on their politicians to do all they can to avoid a no-deal, reinforcing the point that German industry very much needs our market and our importance could be used as the stick to threaten the EU with. In the meantime it seems likely there will be an extension of the March exit date, with PM Theresa May now pushing for what she calls "constructive spirit", putting “self-interest aside”; "It will not be an easy task, but MPs know they have a duty to act in the national interest, reach a consensus and get this done," she said.


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The Brexit deal is dead!

Andrew Hall , PhillipCapitalUK
16/Jan/2019 09:04

The Brexit deal is dead; there can be no doubt about that after last night’s crushing defeat for the government. A motion of no confidence has been called for today, although this is expected to be defeated, with the DUP staying on the government’s side. So what next? After consulting across the political spectrum, the PM will head back to Brussels next week to try to salvage something that will allow the UK to leave the Union in an orderly fashion. In true EU democratic style, Donald Tusk suggests that we just forget about the whole thing and stay - scary. "If a deal is impossible, and no one wants no-deal, then who will finally have the courage to say what the only positive solution is – quotes don’t close and is this what Tusk said?


The pound is unperturbed by the current twist, although that resilience against the euro has been aided by weak German GDP data, with the German economy growing at its slowest rate for five years at +1.5% in 2018 compared to +2.2% in 2017. Sterling trades up +0.12% against the dollar and euro respectively at $1.2876 and €1.1283. The state of the pound remains heavily dependent on Brexit developments, PM Theresa May will at 12.00 GMT go head-to-head with Labour leader Jeremy Corbyn in Prime Ministers Questions. Chancellor of the Exchequer, Philip Hammond has moved to reassure business leaders on that a no-deal Brexit could be blocked, simultaneously raising for the first time the possibility of a delay to Article 50.

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Tags:   UK EU Brexit May Hammond GBP.

UK braces itself for Brexit vote

Andrew Hall, PhillipCapitalUK
15/Jan/2019 08:58

It is now time for Theresa May to face the music as she awaits the outcome of the ‘meaningful vote’ on her deal. MPs get to represent the wishes of their constituencies today when voting on the draft agreement for the UK to leave the EU. It seems to be widely accepted that the agreement will be rejected but the big question is, by how much? Quite what happens then is anyone's guess but one thing is for sure, it looks like we are in for a bumpy ride. There was a rumour yesterday afternoon that the ERG was going to support the bill but this turned out to be just that - sterling remains at its recent higher levels ahead of the vote, trading +0.09% and +0.12% against the dollar and euro respectively at $1.2874 and €1.1229.


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Tags:   UK EU Brexit May Vote GBP.

China exports fall as global slowdown bites

Andrew Hall , PhillipCapitalUK
14/Jan/2019 09:03

The Japanese yen strengthened and oil prices and the Australian dollar fell after Chinese exports came in weaker than expected in December. Figures show exports fell 4.4% year-on-year in December, the first fall in nine months and below market forecasts. The yen, which is considered a safe-haven in uncertainty, gained +0.33% and +0.42% against the dollar and pound respectively, whilst the Australian dollar, which is exposed to regional trade flows weakened -0.33% against the dollar to trade at $0.7191.


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Tags:   China Exports JPY Oil AUD.

Brexit uncertainity pushes sterling lower

Camilla Boldracchi, PhillipCapitalUK
11/Jan/2019 08:57

In the UK GBP remains battered by Brexit woes. Last night, opposition leader Jeremy Corbyn was calling for support to have another general election in order to break the Brexit impasse, should UK PM Theresa May Brexit face rejection during the parliamentary vote on 15th January. This will further complicate the already chaotic situation. Should the vote on PM May's Brexit deal end in failure, the uncertainty over the future of the world’s fifth-largest economy will deepen. Shinzo Abe said during his state visit that he pledged "total support" for Theresa May's Brexit deal and said the "whole world" wants the UK to avoid a no-deal scenario.


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Tags:   UK Brexit May Abe GBP.

USD slumps on FOMC Bostic comments

Andrew Hall , PhillipCapitalUK
10/Jan/2019 08:59

The USD crashed yesterday on comments by FOMC member Raphael Boston who said that interest rates could go in "either direction," the first public acknowledgment of a potential rate cut by the Federal Reserve. Boston a dove added that the "Fed needed to strongly signal that it's not locked into a trajectory." The US Dollar sank against the euro, with EUR/USD breaking firmly above the 1.15 level, trading as high as 1.15695 in the early hours, however the dollar has found a little footing since then to trade at 1.15461.


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Tags:   Fed FOMC Bostic EURUSD.

World Bank warns of "Darkening Skies"

Andrew Hall , PhillipCapitalUK
09/Jan/2019 08:58

The World Bank in its annual global prospects assessment is warning of “darkening skies” for the world economy. Despite the gloomy title, the Bank forecasts continual global growth albeit at a slower pace, whilst warning of increasing risks. The Bank's forecast for the global economy is expansion this year of 2.9% and 2.8% in 2020, whilst the US is likely to expand at just 1.6% by 2021 from 2.9% in 2018 as the effects of Trump's tax cuts start to disappear. Emerging markets are expected to continue to grow, however China's economy is only expected to expand 6% by 2021; long gone are the heady days of 10% seen between 1980 and 2010. The report also warns that the effects of a bad Brexit would not only damage the UK and European economies but could also spread to those in Eastern Europe and North Africa.


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Asian shares mixed ahead of Trump address

Andrew Hall , PhillipCapitalUK
08/Jan/2019 10:44

Asian shares traded mixed on Tuesday with markets waiting on tenterhooks for the outcome of the two-day US-China trade talks. US President Trump is all set for his prime-time television address later today with markets hotly anticipating tangible developments from both US-China trade negotiations and the partial government shutdown. The MSCI's broadest index of Asia-Pacific shares outside Japan slipped from early gains to close down -0.20%, dragged lower by declines in China and Taiwan, whilst in Japan the Nikkei rose +0.82%. Elsewhere Hong Kong’s Hang Seng closed marginally higher at +0.09% or 22.93 points.


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