Market movers today
After yesterday’s recovery in global risk sentiment, where financial markets chose to ignore weak Ifo numbers in Germany and manufacturing data in US, the strength of the rebound will be keenly observed on a day with few economic releases.
In the UK, the key focus is on indications of political support from both sides of the political spectrum for the Brexit deal ahead of the vote in the House of Commons in December.
In the US, markets will focus on four Fed speakers later today and any signals for the rate path in 2019, where the neutral rate lies and whether it should be attained.
Another key market focus is the tension between Ukraine and Russia after renewed fighting between the two countries on Sunday in the Black Sea region. Yesterday, the EU and western governments urged both sides to step back from further provocation, demanding the release of Ukrainian Ships and sailors detained by Russia.
In Scandinavia, we will get Swedish household lending data as well as Danish portfolio investment figures (see next page).
Selected market news
Donald Trump struck a pessimistic tone just days before meeting China’s Xi Jinping, saying he still plans to increase the tariffs rate of USD200bn of Chinese goods to 25% next year and that if negotiations fail, he intends to slap tariffs on remaining Chinese imports. Along with oil, US stock futures fell, while Asian stocks paint a mixed picture this morning.
After the EU approved the Brexit deal, focus in the UK turns to the House of Commons’ arithmetic. At the time of writing, 95 Conservative MPs have said they will vote against the deal and not many Labour MPs showed up to a government briefing on it. Right now, things are clearly not moving in the right direction for Theresa May, questioning our base case with the deal passing the House of Commons, although we still think it will be closer than some might think. Based on the discussions among political analysts in the UK, it seems like Theresa May is increasingly aware of the probability of losing the vote, but that she thinks it might pass the second time. If she loses by a big margin, she probably needs to resign. The vote in the House of Commons will take place on Tuesday 11 December with five days of debate starting on 4 December. Theresa May will start a tour across the country campaigning for the deal. The hope is that more public support will help. While Theresa May’s approval rating has improved lately, the public remains divided on what to think of the deal. In another blow, Donald Trump yesterday also warned that May’s Brexit deal could curb the UK’s ability to strike a trade agreement with the US.
German November Ifo figures edged down further in line with the weaker PMI and ZEW signals. So far, soft indicators do not point to much of a growth acceleration in Germany in Q4 (currently 0.3% q/q at most). Interestingly, ECB speakers largely refrained from commenting on the growth outlook in their speeches yesterday.
