Market movers today
In the Nordics, the big event is the Riksbank meeting today with press release and monetary policy report published as usual at 09:30, followed by a press conference at 11:00 (all local time). It seems to be a broad consensus that the board will strike a softer tone than before and push the rate hike that is currently planned around the turn of the year one or two quarters into the future (for more discussion and our view, see page 2).
In the US, focus is on the ISM non-manufacturing index due out at 16:00 CEST today. Like manufacturing, ISM non-manufacturing has been on a downward trend albeit to a lesser extent. Despite more mixed signals from regional surveys, we expect a decline in the index but it is not a strong conviction call.
Political developments from the internal Brexit negotiations in the UK (monitoring whether the Brexit delay bill will come into law and the next steps from PM Boris Johnson), US-China trade negotiations and the situation in Hong Kong will also be in focus.
Selected market news
Global risk sentiment is supported by the news that China and the US trade negotiators have agreed to meet in early October. This morning Asian equity markets are seeing healthy increases with the Nikkei index up more than 2%, while the safe-haven Japanese Yen is under pressure. Overnight Chinese Vice Premier Liu He announced that the Chinese side has agreed to visit Washington ‘in early October’ after a telephone call with US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer, according to a statement from China’s Ministry of Commerce. The US trade representative’s office also confirmed that talks will take place. Lower level ministerial discussions between the two sides will take place in the coming weeks ahead of the October meeting. While the market may welcome the news in the short term, we are sceptical that the two sides genuinely can break the impasse (see here ). Risk sentiment was also supported yesterday by the decision by Hong Kong to withdraw the extradition bill, possible monetary easing in China seeking to lower reserve requirement for banks and reduced risk of an imminent no-deal Brexit (see more below).
In the UK, the House of Commons late last night passed the Brexit delay bill as expected, which is now being debated in the House of Lords (where the Government tries to ‘filibuster’ it). It will probably come into law on Friday. Also as expected, PM Boris Johnson lost the vote on his call for a snap election (required two-third majority), as the opposition wants to pass the Brexit delay bill first in the House of Lords. A general election still seems unavoidable at this point and will probably be called on Monday. Regarding the timing of the election, Labour leader Jeremy Corbyn according to the BBC has said he will not accept an election day before 31 October, while PM Johnson wants the election to take place on 15 October before the EU summit on 17-18 October. The election result will be extremely important for the future of Brexit but it is unfortunately very difficult to translate polls to the number of mandates due to the UK political system, see our Brexit Monitor .
