Theresa May to face vote of no-confidence

Andrew Hall , PhillipCapitalUK
12/Dec/2018 08:57

The no confidence vote against UK Prime Minister Theresa May has been triggered by the 1922 Committee and will take place this evening between 18.00 GMT and 20.00 GMT. The challenge to May’s tenure comes after the required 48 letters calling for a contest were delivered. May now requires a majority vote in her favour to win. Sterling has slumped as a result breaking below the $1.25 threshold in early trading, it has recovered a little since mind to trade at $1.2528.


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US, China discuss trade strategy

Andrew Hall , PhillipCapitalUK
11/Dec/2018 09:14

The United States and China earlier today discussed the strategy for the next stage of their trade talks during a conference call between U.S. Treasury Secretary Steven Mnuchin, Trade Representative Robert Lighthizer and Vice Premier Liu He. A positive sign that the truce that stalled the planned tariff increase of 25% from 10% on $200 billion worth of Chinese goods can develop in to a long-term trade arrangement. “Both sides exchanged views on putting into effect the consensus reached by the two countries’ leaders at their meeting, and pushing forward the timetable and roadmap for the next stage of economic and trade consultations work,” the ministry said. Market sentiment remains fragile with concerns of a global economic slowdown exasperated by ongoing geo-political tensions.


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May is off to Europe in bid to rescue deal

Andrew Hall , PhillipCapitalUK
11/Dec/2018 09:12

Theresa May is either very clever, and has a cunning plan that will blow all her critics away, very stupid, and has no idea what she is doing, or very brave, hoping to do battle with Europe in order to deliver a hard fought, acceptable deal to silence her critics. She is certainly thick skinned. It is hard to see what delaying the Brexit vote is going to achieve; there are rebels on both sides of the debate in the Commons with very black and white agendas - in or out? And getting something new to put to them - the Europeans have done the deal they are prepared to do, they have said they will give assurances but not change the deal - seems impossible. The PM is off to Europe today to meet with other leaders to try and salvage something from this mess.
The heightened possibility of an unruly Brexit pushed sterling lower yesterday, the pound has however steadied a little this morning to trade +0.46% up against the dollar at 1.2619, whilst the FTSE opened +0.65% higher at 6,765.18, after a shaky session on Monday.


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UK can unilaterally end Brexit

Andrew Hall , PhillipCapitalUK
10/Dec/2018 08:39

Politics are coming to a head in the UK with tomorrow’s Parliamentary vote on the Brexit agreement likely to be a defining moment in Theresa May’s premiership. A couple of weeks back it looked as though Tory rebels had shot their bolt too early in an attempt to remove her from the top job but timing is everything and it looks as though they have been biding their time to go in for the kill. That time may now be upon us. It does not look as though the bill will be passed and the PM does not appear to have any last minute rabbits to pull out of the hat to change that. We look set to be thrust, using May’s words, "into uncharted waters". Not helping matters for May’s Brexit deal is the decision by the European Court of Justice, who ruled that the UK can unilaterally revoke its withdrawal from the EU without the permission from all 27 EU members - opening the door further for a potential 2nd referendum. All this uncertainty is pushing the pound lower once more with the euro trading +0.27% up against the pound at 0.8978 - the continued uncertainty is likely to see a move to safety assets.


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Oil prices slide ahead of key OPEC meeting

Andrew Hall , PhillipCapitalUK
06/Dec/2018 08:46

OPEC and its allies meet in Vienna today for the start of their two-day meeting in which they will strive to reach accord on production levels for the next 6-months to combat increasing pricing weakness in lieu of softer global growth expectations in 2019. A huge bear movement in global oil benchmarks along with a massive liquidation in long positions by money managers has dampened market confidence on oil prices considerably. Adding fuel to the fire has been US President Trump’s relentless push to lower oil prices - “Hopefully OPEC will be keeping oil flows as is, not restricted. The world does not want to see, or need, higher oil prices!” Trump said on Wednesday. There have been early reports that Russia has accepted the need to cut output ahead of the meeting, although this has yet to be confirmed. International benchmark Brent crude and West Texas Intermediate (WTI) both trade down this morning at $61.17 per barrel and $52.68 respectively.


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May's Government held in "contempt of parliament"

Andrew Hall , PhillipCapitalUK
05/Dec/2018 08:52

Not a good day at the office for Theresa May and her team yesterday as the government is forced to publish the Brexit agreement legal advice in full and an amendment allowing Parliament say on what happens in the event of the deal getting voted down next Tuesday meaning her power is slowly slipping away. The vote on contempt drove sterling down to levels not seen since June last year, with cable tumbling to $1.2657, although has recovered a little since to trade at 1.2719 in early trading. The debating continues today. The European court opened the way for the UK to unilaterally revoke Article 50, fuelling conspiracy theories that we will never leave in any case.


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Asian shares fall as rally proves short-lived

Andrew Hall , PhillipCapitalUK
04/Dec/2018 08:45

Asian shares dropped on Tuesday on mixed signals over US-China trade talks with Monday relief rally short-lived. The safe-haven yen advanced and treasury yields fell. There has been conflicting statements from both parties regarding the 90-day truce which is sapping market confidence as markets look for something more concrete. An example will be the fact that President Trump claimed that China will reduce tariffs on US cars exported to the country, but it has not been verified by China at all. It is also to be noted that the trade war has not ended, and the core issues for the trade war remains relatively sticky, such as trade balances and IP infringements. The MSCI’s broadest index of Asia-Pacific shares outside Japan fell -0.3% with Chinese equity markets firmly in the red, whilst in Hong Kong the Hang Seng declined -0.92%.


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OPEC loses a member

Camilla Boldracchi , PhillipCapitalUK
03/Dec/2018 09:12

Qatar is withdrawing from the Organization of the Petroleum Exporting Countries (OPEC) as of January 2019, Saad al-Kaabi, the country's Energy Minister said early today. The announcement comes ahead of the meeting by OPEC and its allies including Russia on Dec. 6-7 to discuss cutting.


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Brexit: Project fear goes into overdrive

Andrew Hall , PhillipCapitalUK
30/Nov/2018 09:12

The chances of the PM securing the Commons vote seems less likely every day at the moment; there does not appear to be any swing in her favour and Project Fear is going into overdrive as to what will be worse off after Brexit, from the economy to security. There is some market movement - the pound has drifted towards the bottom end of its range trading at 1.1231 against the euro in early trading. Given the stark scenarios set out by the Bank, this is quite surprising and suggests we are in for a sharp move one way or the other once there is clarity. Mrs May is in Argentina for the G20 this weekend and will be hoping for support from other global leaders but she already knows where Trump stands.


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Tags:   UK EU Brexit May G20 GBPEUR.

Equities surge on Fed Cheif Jerome Powell comments

Andrew Hall , PhillipCapitalUK
29/Nov/2018 09:01

Federal Reserve Chairman Jerome Powell said that interest rates are approaching “neutral” where rate movements neither spur or restrict the economy. Equity markets recorded their strongest advance since March on Powell’s comments with the S&P 500 and Dow Jones closing up +2.30% and +2.50% respectively - the largest advance was however recorded in the Nasdaq which closed +2.95% higher. Powell reinforced his positive economic views forecasting continued solid growth, low unemployment and inflation close to the 2% target-level. “There is a great deal to like about this outlook” this is however despite their being “no preset policy path,” Mr Powell said. “We will be paying very close attention to what incoming economic and financial data are telling us.” The dollar weakened on the comments with cable now trading back over the $1.28 mark. The Fed’s preferred measure of inflation the Core PCE (Oct) is released today at 13.30 GMT expected to hold-flat YoY and MoM at +2.0% and +0.2% respectively.


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Let’s hope it’s not a “disorderly” Brexit!

Andrew Hall , PhillipCapitalUK
28/Nov/2018 18:34

The below details the effects of a “disorderly” Brexit according to the Bank of England:
- Britain's GDP drops 8%
- House prices plunge 30%
- Commercial property falls 48%
- Pound slides 25%, beneath $1
- Unemployment rises to 7.5%
- Inflation accelerates to 6.5%
- BoE benchmark rate rises to 5.5% and averages 4% over 3 years Britain goes from net migration to net outflows of people


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Tags:   UK EU Brexit BoE Carney.

US dollar steadies ahead of GDP data

Andrew Hall , PhillipCapitalUK
28/Nov/2018 08:57

The US dollar steadies ahead of the first revision to the third quarter GDP annualised figure which is set to hold-firm at +3.5%, after rising +4.2% in Q2. Q4 GDP according to IHS Markit research remains on track to record +2.5% growth. Concerns for a potential growth cool-down in 2019 have begun to seep in to the markets, this comes after General Motor’s decided to close 5 plants laying-off tens of thousands employees in the process, with GM Chairman and CEO Mary Barra sating, "We recognize the need to stay in front of changing market conditions” - a decision which has not sat well with US President Trump who has threatened to cut all their subsidies including electric cars. Fed Chairman Jay Powell will be speaking after the release with the markets keen to hear his views on current economic growth amid heightened US-China trade tensions and concerns for global economic growth. Has any of the recent market struggles raised the possibility of policy changes - Decembers rate hike remains priced in, but the two proposed hikes in 2019 remain data dependent.


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Tags:   US GDP IHS Fed Powell.

Oil slides as production soars

Andrew Hall , PhillipCapitalUK
27/Nov/2018 08:48

Oil prices slid on Tuesday after oil production in Saudi Arabia soared to an all-time high ranging between 11.1m to 11.3m barrels per day during the month. Oil markets remain cautious ahead of the G20 gathering on 30 Nov and OPECs Vienna meeting on Dec 6 in which output cuts are expected to be put in action as they look to stabilise oil markets after recent sharp slumps. Geo-political pressures are however playing there part with US President Donald Trump pushing for lower prices by urging OPEC+ to reject output cuts that will increase prices. WTI trades around $51.21 per barrel, whilst Brent trades in the low $60 per barrel in early trading.


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Italy to consider lower deficit goal

Andrew Hall , PhillipCapitalUK
26/Nov/2018 09:35

Despite there being an announcement that Italy and the European Commission will work in the coming days to reach common ground on Italy’s 2019 draft budget and Italian Deputy Prime Minister Matteo Salvini hinting on Sunday of a possibility in tweaking Italy’s deficit goal for next year, it failed to give strength to the EUR today. I think nobody is fixated on this, if there is a budget which makes the country grow, it could be 2.2 percent or 2.6 percent.” “The problem is not about decimal points, it’s a question of seriousness and being concrete," Salvini said. At present, the EU is due to implement potential fines on Italy and it could escalate tensions between Italy and the EC further. In addition, ECB President Mario Draghi will address the European Parliament’s committee for economic and monetary affairs tonight. Based on his recent past speeches, he has expressed his concerns of a slowing economy and hinted at a possible dip in inflation.


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Brexit agreement "within our grasp"

Andrew Hall , PhillipCapitalUK
23/Nov/2018 08:56

The PM tells us the EU deal is within reach and the market starts to prepare itself accordingly but whether it is achievable or not will come down to the vote in Parliament next month and for that reason the market reaction is quite muted. Sterling recovered some lost ground trading up against the euro at 1.1274 and ten year gilt yields rose by around three basis points. Confirmation of EU agreement in Brussels on Sunday could see a continuation of this trend but it still appears Gibraltar could be a sticking point - if May gives ground here there will be calls to throw her in the Tower!


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"Further progress" made on finalising Brexit deal

Andrew Hall , PhillipCapitalUK
22/Nov/2018 09:04

May and Juncker have come to the end of the negotiations ahead of Sunday's planned EU leaders' summit and May will return to Brussels on Saturday in order to tie up some loose ends. "We've made further progress and as a result we have given sufficient direction to our negotiators, I hope, for them to resolve the remaining issues and that work will start immediately" May said. Angela Merkel has said that she will not go to Brussels on Sunday to be involved in last minute "horse trading" if no final agreement is reached before then - things are certainly being pushed to the wire and there are no guarantees that agreement will be reached. While sterling has weakened to towards its recent lower levels trading down -0.12% against the euro, gilt yields firmed a touch yesterday, held up by some stability returning to equity markets ahead of today's US Thanksgiving holiday.


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Oil halts sharp declines, but outlook remains weak

Andrew Hall , PhillipCapitalUK
21/Nov/2018 08:51

Oil halted sharp declines on Wednesday as markets adjusted to unexpected declines in US crude inventories which fell by 1.55 million barrels last week, with doubts continue to persist over OPECs plans to cut output. Tuesday saw oil plunge -7.6% with Brent wiping out all 2018 gains with concerns of a global supply glut souring sentiment, something the API figures has helped to relieve somewhat, be it just in the short-term. Comments by US President Donald Trump escalated Tuesdays sell-off - “They (Saudi Arabia) have worked closely with us and have been very responsive to my requests to keeping oil prices at reasonable levels - so important for the world”. “I’ve kept them down; they’ve helped me keep them down. Right now we have low oil prices, or relatively - I’d like to see it go down even lower” Trump added. WTI is trading around the mid-$54 per barrel mark, whilst Brent is in the mid-to-high $63 per barrel range.


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Asian shares follow Wall Street lower

Andrew Hall , PhillipCapitalUK
20/Nov/2018 08:46

Asian shares trade lower on Tuesday with Europe now expected to follow suit after Wall Street plunged in to a sea-of-red on sharp falls in technology shares and heightened concerns of slowing global demand. The Dow Jones and S&P 500 closed down -1.56% and -1.66% respectfully, whilst the technology based NASDAQ slumped -3.03%, down -13% since Septembers’ peak and now in correction territory. Apple shares sank nearly -4% and are now down around -20% from October highs. Elsewhere the dollar slipped to a three-week low of 112.40 yen, last trading at 112.51, as markets begin to ponder the end of the dollars strong bull run after concerns were raised by Fed Vice Chair Richard Clarida and Dallas Fed President Robert Kaplan of a global economic slowdown. The MSCI’s broadest index of Asia-Pacific shares outside Japan fell -1.2% continuing its recent downward trend. Down Under, the ASX200 declined -0.38% with broad-based declines in all sectors, whilst in Hong Kong the Hang Seng dropped -2.08%, with pharmaceutical and insurance stocks leading declines.


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US-China trade divisions widen

Andrew Hall , PhillipCapitalUK
19/Nov/2018 09:14

Trade divisions between the two largest economies show no sign of defusing anytime soon with China's Xi Jinping warning countries which embrace protectionism are "doomed to failure" a veiled swipe at his US counterparts America First policy. "History has shown that confrontation, whether in the form of a cold war, a hot war or a trade war, will produce no winners” Xi added at the Asia-Pacific Economic Cooperation (Apec) summit. The comments however did not deter US Vice-President Mike Pence who stood firm later saying that he was prepared to "more than double" the tariffs imposed on Chinese goods. The disparity and tension between the nations resulted in a failure to agree a formal leaders' statement a first in the history of Apec summits.


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Tags:   US China Apec Xi Pence.

Theresa May: "The course I have set out is the right one for our country"

Camilla Boldracchi , PhillipCapitalUK
16/Nov/2018 10:21

UK Prime Minister Theresa May teased her critics at last night's press conference on Brexit with her opening statement sounding like the prelude to a resignation. In spite of this the PM used the opportunity to once again reinforce the merits of what has been negotiated with the EU. It is hard, however, to see her getting the necessary support in Parliament to get this deal through and the political void that would create could indeed, over time, see momentum build for another public vote on Brexit. The Brexit theme is no doubt going to run through into the weekend, with all eyes on the likes of Jacob Rees Mogg who is helping spearhead a movement to force a vote of no confidence against Theresa May.
On a similar note, the pound seems to have found its level down just below 1.13 against the euro for the time being and gilt yields plunged yesterday as the prospect for no deal in the event of a commons defeat rises, implying a stalling of the economy and a move to stimulatory monetary policy. On the data front the UK saw weak October retail sales figures, with the mild weather being blamed for less spending on winter clothes: low confidence from the consumer will also have played its part.


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