Morning Markets: Brexit and the 3-month standoff
- Euro area September Flash Purchasing Managers' Index (0800 GMT)
- US September Manufacturing Purchasing Managers' Index (1345 GMT)
- Fed's Harker, Mester & Lockhart speak (1600 GMT)
Three months to the day after a majority of British voters made their fateful decision to quit the European Union and we are no nearer a resolution. Sure, the FTSE and other UK-based indices have logged strong gains since the vote but that's only because sterling's slide against its peers has rendered UK shares deliciously cheap.
The UK and the EU are still jammed in stalemate as Britain presses for informal negotiations prior to activating the legal clause that would trigger a two-year deadline for completion of the divorce. Across the English channel the UK's erstwhile partners refuse to engage in any meaningful way and repeatedly urge the Britain to "just get on with it". The FTSE closed 1.12% higher yesterday while this morning, at 0700 GMT, sterling was 0.3% down against the dollar at 1.3035. Small swings and more roundabouts await.
Elsewhere in overnight trading, Japan's Nikkei 225 headed slightly lower. But the falls were minor, and most of Thursday's sharp gains remained intact. In neighbouring China, Fitch Ratings has flagged concerns that bank bad debts could spiral sharply higher. Meanwhile in Australia, there was a strong finish to the week for equities, with the big four bank stocks pushing the benchmark S&P/ASX200 higher.
Europe's economic calendar is rather scant today aside from a bunch of Eurozone flash purchasing managers' indices so markets will likely continue to adjust to the Federal Reserve's latest policy signal and the fact that we're still enmeshed in the big experiment known as QE to central bankers and easy money to rest of us.
- Crude prices lost ground after rising on hopes of a Saudi-Iran deal
- Yahoo confirms huge data breach, affecting at least 500 million accounts
- Japan September flash manufacturing PMI expanded for first time in seven months
- Asian markets were slighty lower across the board, losing some of Thursday's gains
- The Nikkei 225 was down 0.2% at 16,767 at 0500 GMT
- Federal Reserve inaction has given gold prices a lift
- Fitch Ratings says bank bad debts in China are 10 times greater than had been thought
- The ratings agency says bank rescue costs could hit a third of China's annual GDP
- China's Baosteel and Wuhan Steel will merge; the move could ease the global steel glut
- Philippines' President Duterte shrugs off S&P concerns about policy predictability
- The populist leader says he is ready to turn to China and Russia for funds if needed
- Australia's S&P/ASX200 made gains in a strong finish to the week
- The benchmark index was up 1% at 5426 at 0500 GMT
- The US dollar edged slightly higher against the yen; it was worth ¥01.1700 at 0119 GMT
- The Australian dollar held above 0.76; it was worth 0.7640 at 0119 GMT
- JPY retreated as officials warned they could step into currency markets to tame the unit
From the Floor
Go greenback, go. "USD has rallied on strong US jobs numbers overnight," Liu
Free money. "Markets are trying to adjust to the central bank punch bowl still there," Hardy
Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.
Even a glacial pace of rate hikes would leave the Fed ahead of most other central banks, and keep the USD as the least ugly currency for some time to come, predicts Juhani Huopainen.
Asian shares liked the accommodative Fed but did not enjoy oil going down – and the result this morning was a confused bag, says Saxo's Singapore team.
Oh that phoney war!
While Brexiteers have questioned what the fuss was all about given the relatively benign state of the UK economy, the reality is that we are in a phoney-war period and the hard road lies ahead, says Martin O'Rourke.
Morning Markets goes out on the TradingFloor platform at 0700 GMT, Monday to Friday.
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