Brexit woes deepen as Conservatives go on the attack

Andrew Hall , PhillipCapitalUK
16/Jul/2018 09:03

Theresa May's Brexit woes continue with another minister resigning, that's the 8th in a week. She also faces another tough week in the Commons with Brexit supporters within her own party set to launch an ‘assault’ to force a compromise in the Brexit strategy for leaving the European Union. Although May is not expected to be defeated by the Eurosceptics vote for amendments it will weaken her negotiating position, revealing a deeper divide within her own party.
If that wasn’t enough Brexit turmoil Justine Greening the former education secretary pours scorn on the PM's compromise deal, calling it a “fudge” and “the worst of both worlds” as she pushes for a second referendum. Ms Greening said the Brexit proposal are a "genuine clever attempt at a compromise that could work" but "suits no-one". “We'll be dragging Remain voters out of the EU for a deal that means still complying with many EU rules, but now with no say on shaping them.”


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Asian shares fall as China economic data cools

Andrew Hall , PhillipCapitalUK
16/Jul/2018 08:41

Asian shares fell on Monday failing to follow their US counterparts with investors shrugging off a raft of Chinese economic data as fears mount on China’s ability to withstand the consequences of a global trade war. Official China data showed economic expansion cooled with second-quarter GDP growth at +6.7%, down from +6.8%, the decline comes on the back of tightening financial policy and softer global trade. The MSCI's broadest index of Asia-Pacific shares outside Japan dropped trading -0.37%, whilst in Hong Kong the Hang Seng traded down -0.34%, led by declines in property and materials. Japanese markets are closed today for the public holiday Marine Day.


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Soft Brexit to 'kill' UK-US trade deal

Andrew Hall, PhillipCapitalUK
13/Jul/2018 08:59

US President Donald Trump has dented any hopes UK Prime Minister Theresa May had of securing a trade deal with the US, adding that the PM’s plans for a soft Brexit would "probably kill the deal" as the US "would be dealing with the European Union" instead of with the UK. “We have enough difficulty with the European Union," Trump said. If the prospect of an end to the “major trade relationship with the United States” wasn’t enough for May, Trump decided to throw his support to departing Foreign Secretary Boris Johnson saying that he would make a "great prime minister" - "I think he's got what it takes". Trumps comments saw Cable drop with the pound now trading back below $1.32 to trade at $1.3127 this morning.


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Tags:   UK-US Trump EU Cable.

Long-awaited Brexit White Paper released

Andrew Hall , PhillipCapitalUK
13/Jul/2018 08:45

Interestingly Trumps comments came on the same day the UK government released their proposal for their long-term relationship with the EU. It was hailed by Dominic Raab as a blueprint for a "principled, pragmatic and ambitious future partnership between the UK and the EU". His predecessor, David Davis however, said that "I voted to leave not to half leave". According to the Daily Telegraph, the Prime Minister would not be able to count on the support of the Labour Party because it promises complete compliance on EU competition law and this would scupper any plans Jeremy Corbyn has on nationalisation, state aid and public procurement, so a rocky road lies ahead for the government. You can view the proposal here .


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Markets look ahead to US CPI

Andrew Hall , PhillipCapitalUK
12/Jul/2018 09:31

The most significant US data this week is the June inflation report out today at 13.30 BST which is forecast to show a +0.1% increase in both headline and core price growth. Headline CPI and Core CPI (YoY) (Jun) are due at +2.9% and +2.3% respectively. If consumer inflation continues its current trajectory then investors will expect a ‘mini-surge’ for the greenback after recent falls against the pound and euro, whilst the probability of a further two rate hikes this year will rise further. However if CPI was to mirror Friday’s labour data, easing back slightly then expect further relief for the euro, pound and the yuan, with the yuan declining of late as the global trade war begins to take effect.


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Tags:   US CPI Fed USD.

Oil prices sink on Libya supply return

Andrew Hall , PhillipCapitalUK
12/Jul/2018 09:07

Oil prices slumped on Wednesday recording their biggest daily loss in over a year after the announcement by Libya's National Oil Corp that it would reopen four export terminals which had been closed since late June and had all but shut the country's oil output. Market sentiment fell further by reports of an output surge in Saudi Arabia and escalating global trade tensions following US President Donald Trump threat to impose a 10% additional tariff on a further $200bn worth of Chinese imports. Crude futures had parred losses in early trading as the US government reported a huge drop of 12.633M in crude oil stockpiles down around 4% on the average for this time of year. Brent and WTI declined 7% and 5% respectively, with WTI recording its worst one-day decline in a year – both have recovered slightly in early trading as Brent trades around $74.34 per barrel, whilst WTI has sunk below $70 per barrel to trade at $69.474.


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Trump ups the ante with new China tariff

Andrew Hall , PhillipCapitalUK
11/Jul/2018 09:08

Click here The trade war between the two largest economies deepened on Tuesday after US President Donald Trump threatened to impose a 10% additional tariff on a further $200bn worth of Chinese imports by September, developments which sent Asian shares skidding. Items including in the new tariff list include food products, minerals and consumer goods such as handbags. Robert Lighthizer, the US Trade Representative said there was "no justification" for China's retaliation, adding that “as in the past, the United States is willing to engage in efforts that could lead to a resolution of our concerns about China's unfair trade practices and to China opening its market to US goods and services," he said.
China's commerce ministry said it was "shocked", labelling the actions “completely unacceptable in a statement released on Wednesday adding further that they would complain to the World Trade Organisation. We now wait to see how Beijing plan to retaliate to the escalating tit-for-tat tariff measures with the threat of further “qualitative measures, which businesses worry could include further inspections to delay investment approval and consumer boycotts.


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Bank of Canada set to raise rates

Camilla Boldracchi, PhillipCapitalUK
11/Jul/2018 09:00

Today at 15:00 BST, the Bank of Canada’s Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins will hold a press conference to discuss the contents of the Monetary Policy Report. The Bank of Canada has in the past weeks suggested that it would soon raise rates in this July meeting. The Canadian economy has shown signs of picking up in the second quarter with the encouraging increase in wages data release. However, trade relations with the US have deteriorated since their last meeting. Nevertheless, it seems that the Bank of Canada will dismiss this source of uncertainty for the present time and hike from 1.25% to 1.50%.


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The UK is "truly headed for the status of a colony"

Andrew Hall, PhillipCapitalUK
10/Jul/2018 08:48

Boris Johnson followed David Davis and tendered his resignation saying that Theresa May’s Brexit strategy would mean that the UK is "truly headed for the status of a colony". The question now is can May survive? It would require 48 Tory MP's to call a vote of no confidence, she would need a simple majority to keep her job and if she survived it, another vote could not be called within a year.
Click here for the Primie Minister's letter to Boris


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Asian shares edge higher

Andrew Hall , PhillipCapitalUK
10/Jul/2018 07:35

Asia shares continued to climb on Tuesday tracking their US counterparts with trade concerns taking a back seat as optimism rises for an upbeat earnings season, whilst back in the UK the high profile resignation of Foreign Secretary Boris Johnson saw the pound slump with political uncertainty mounting and further questions raised with regard to the Brexit strategy. The pound is closed down -0.18% against the dollar, whilst the euro is up +0.07% against the pound.
The MSCI's broadest index of Asia-Pacific shares outside Japan rose +0.40%, building on yesterday’s +1.1% gains, whilst Japan’s Nikkei was up +0.66% with Fanuc the robotics and automation manufacturer adding +1.42% and Fast Retailing the Uniqlo-owner gaining +0.84%. Elsewhere Hong Kong’s Hang Sang was a marginal up at +0.09% after reverting early trading gains.


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David Davis resigns as Brexit Secretary

Andrew Hall , PhillipCapitalUK
09/Jul/2018 09:11

David Davis's resignation last night has thrown talk of a consensus at Friday's Cabinet meeting at Chequers out of the window. In his letter to Theresa May, David Davis said “the current trend of policy and tactics" was making it "look less and less likely" that the UK would leave the customs union and single market, adding that he is “unpersuaded" that the government's negotiating strategy "will not just lead to further demands for concessions" from Brussels. Junior Minister Steve Baker has also walked and arch-Brexiteer Jacob Rees- Mogg, who leads a group of 60 like-minded Tory MP's has said that he will vote against the PM's proposals in the Commons.


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North Korea declacre talks "regrettable"

Andrew Hall , PhillipCapitalUK
09/Jul/2018 09:02

Follow-on talks between the US and North Korea seem to have hit a few p roblems as US Secretary of State Mike Pompeo called them "productive" whilst North Korea said they were "regretful", criticising the “attitude” of the US. "We expected the US to bring constructive measures to build confidence in accordance with the spirit of the US-NK Summit" North Korean officials said. Conversely Pompeo stated "we had detailed, substantive conversations about the next steps toward a fully verified and complete denuclearization".


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Nonfarm payroll ahead

Andrew Hall , PhillipCapitalUK
06/Jul/2018 09:07

We receive Nonfarm payrolls in the US today at 13.30 BST set to show +195,000 jobs added for the month June, down from May’s reading of +223,000. Wage and unemployment data is also out with Average Hourly Earnings (YoY) (June) due at +2.7% no change from last time round, whilst market forecasts see unemployment holding firm at an 18 year low of 3.8%...with some analysts seeing this retreating as low as 3.7% as continuing jobless claims fall sharply.


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Carney's bullish stance paves the way for August hike

Andrew Hall , PhillipCapitalUK
06/Jul/2018 09:03

Mark Carney appeared to endorse a 2018 rate rise but did not say whether it would be August or November when asked the question following a speech in Newcastle yesterday. He said the economy is recovering as the Bank thought it would back in May, and said that they will have enough information by the time of the August meeting to make a decision on rates. He warns that a trade war will dampen growth and stoke inflation. Despite the hawkish tinge to his words UK yields pushed to the lower side, where changed. Look out for Brexit developments today.


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Tags:   UK BoE Carney Rates.

FOMC minutes due at 19.00 BST

Andrew Hall, PhillipCapitalUK
05/Jul/2018 08:32

The FOMC will release their minutes from their most recent meeting on June 13 at 19.00 BST today, in which they raised the base rate 0.25% to 2%, the highest levels since September 2008. The committee have signalled further hikes this year, with markets keen to gauge the rate of tightening; it will be interesting to assess the tone to the minutes after a fairly dovish reading last time round.


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Tags:   US Fed FOMC Minutes.

Asian markets endure torrid session ahead of tariffs

Andrew Hall , PhillipCapitalUK
05/Jul/2018 08:30

Asian shares fell for a fourth straight day hitting nine month lows on Thursday as caution seeps in to the equity market ahead of Fridays deadline for the $34 billion worth US tariff on Chinese imports. The tit-for-tat measures have sapped market sentiment and show no sign of stopping anytime soon with Chinese officials confirming “equal scale, equal intensity” retaliatory measures that will be effective “immediately” targeting soybeans, corn, wheat, rice, beef, pork, poultry, nuts, fish, dairy products and vegetables in the first round of counter measures. The MSCI's broadest index of Asia-Pacific shares outside Japan continued its weekly slump trading down -0.40%, whilst in Japan the Nikkei dropped -0.78% with broad-based loses in oil producers and retailers. Hong Kong’s Hang Seng fell -1.00% lead by sharp declines in the energy and materials sector with both continue yesterday’s sharp declines.


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Oil prices edge higher as supply tightens

Andrew Hall , PhillipCapitalUK
04/Jul/2018 09:02

Oil prices edged higher on Wednesday after reports of reductions in US fuel inventories caused by an outage at Syncrude Canada oil sands facility in Alberta, which supplies the US market. Capacity woes from Libya, Angola and Venezuela continue to overwhelm incremental output and prop prices further north. Iran has threatened to disrupt Middle Eastern supply as US moves on a ‘zero import’ campaign on Tehran’s trade partners. WTI crude futures traded up +0.6%, whilst Brent futures gained +0.4% from their previous close.


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Tags:   Oil US Syncrude WTI Brent.

June Services PMI in focus

Andrew Hall , PhillipCapitalUK
04/Jul/2018 08:54

Today is Independence Day in the US so markets will naturally be a little quieter, nevertheless we do receive service sector data from across the Eurozone and the UK. In the Eurozone both the Markit Services PMI (Jun) and Markit PMI Composite (June) are forecast no change at 55 and 54.8 respectively - both PMI’s have recently relinquished half of the annual gains obtained back in January and February, yet remain marginally bullish. Back in the UK we receive Markit Services PMI at 09.30 BST which is expected to hold steady at last month's 54.0; anything markedly higher will set the hawkish speculation alight again over the possibility of an August rate rise. MPC hawk Michael Saunders warned yesterday that rates could rise faster than the market expects, going back to a lack of slack in the economy - a subject upon which there is obviously disagreement on the committee.


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Merkel averts governement collapse

Andrew Hall, PhillipCapitalUK
03/Jul/2018 09:01

German Chancellor Angela Merkel appears to have avoided the collapse of her government over immigration issues after successful talks with her rebellious Interior Minister Horst Seehofer drops his resignation threats. “After intensive discussions between the CDU and CSU we have reached an agreement on how we can in future prevent illegal immigration on the border between Germany and Austria” Seehofer said. Retail sales for May from the Eurozone should also add further interest in the euro following German developments with MoM forecast no change at +0.1%, whilst YoY is set to decline -0.3% to +1.4%.


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Asian shares extended recent loses

Andrew Hall , PhillipCapitalUK
03/Jul/2018 08:52

Asian shares extended recent loses on Tuesday as investors fears mount over US-China trade relations souring market sentiment and raising concerns of an end to synchronised global growth. The Yuan slumped against the dollar, falling below 6.7 per dollar and treasury yields dipped. The MSCI's broadest index of Asia-Pacific shares outside of Japan fell -1.4%, hitting lows not seen since September 29, whilst Japan’s Nikkei edged close to a 3-month low settling down-0.12%. Elsewhere Hong Kong’s Hang Seng reopened after a public holiday down -1.82% with the energy and services sectors leading losses. Down under Australia’s ASX200 bucked the trend recording a +0.52% gain.


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