The departure timetable for UK Prime Minister Theresa May is set to be announced today. The pound has been hit further as the uncertainty increases with senior ministers quitting the government and a number of candidates already building their leadership election campaign teams. The 10th of June is likely to be the start of the official leadership race. Sterling suffered its 14th consecutive day of losses against the Euro yesterday, its longest losing streak on record. It stood at 0.8829 Pound to the Euro.
The Euro also slumped to levels last seen in May 2017 as the recovery in euro zone business activity was weaker than expected. Early today, the currency was flat at $1.1181. It continued to edge lower this morning, despite bouncing off its year to date previous low. It is expected to continue its descent attributed by the devastating slew of economic data released yesterday evening. German manufacturing numbers continue to contract and as the Eurozone's largest economy, its poor manufacturing numbers dragged down the Eurozone’s manufacturing PMI, which posted a contraction that was worse than the previous month. Coupled with the possible threat of automobile tariffs by the US, the Eurozone would be susceptible to further weakness.
Meanwhile, polling for the European Elections kicked off yesterday which could add to the downside risk of the Euro. The European Elections this time around are deemed crucial, due to the rise of the far-right, which has gained popularity as of lately and threatens the future direction of the Eurozone. The strong support for anti-European groups in the election is thus generally seen to be negative for the EUR, as it is expected to add more political instability.
Stock markets in Asia were mixed this morning, with sentiment torn on the U.S.-China trade war between worries and hopes. MSCI bounced back to trade flat after hitting a four-month low earlier, down 0.8% so far on the week. Chinese equities were holding on as investors took advantage of cheap share prices. The Shanghai Composite gained 0.1% and the blue-chip CSI 300 rose 0.4% in afternoon trade. Hong Kong’s Hang Seng added 0.3 and Japan’s Nikkei was lower by 0.3%. Things look a bit better in European stock markets with Euro Stoxx 50 index, German DAX futures gaining 0.4%, and London’s FTSE futures up 0.3%. On Wall Street, the Dow Jones Industrial Average fell 1.1%, the S&P 500 1.2% and the Nasdaq Composite dropped 1.6%. In commodity markets, oil prices tumbled on Thursday as trade tensions dampened the demand outlook, with the crude benchmarks posting their biggest daily falls in six months. Prices stabilised again today amid OPEC supply cuts and tensions in the Middle East. U.S. crude reached $58.58 a barrel, up 1.16%, after Thursday’s 5.7% fall that took it to the lowest in two months. Brent crude futures gained 1.18% to $68.56 per barrel, after falling 4.6% in the previous session.
