Article / 13 November 2017 at 8:00 GMT

Morning Markets: Rumoured Tory plot to oust May hits GBP

Senior Editor / Saxo Bank




  • Portugal: CPI (11:00 GMT)
  • Russia: GDP y/y (13:00)

Rumours that some 40 conservative MPs have signed a call for a no-confidence vote in Britain's prime minister, Theresa May, have slammed into sterling, sending it sharply lower against the dollar, among others. This rumoured plot comes after worries that Britain might crash out of the European Union without a Brexit deal in 2019, intensified over the weekend. Michael Barnier, the EU's chief negotiator, said the bloc was preparing contingency plans for this eventuality and "European governments and business should 'get prepared' for a no-deal Brexit scenario", the FT reports. 

In Ireland, which is uniquely exposed to Brexit and trade with the UK, the country's leader, Taoiseach Leo Varadkar, said he remained confident that a deal would be struck but also warned that Ireland would need to make provisions for a possible over-the-cliff Brexit.

In Asian markets overnight, the Nikkei 225 took another worrying tumble, and with the rest of the Asia Pacific region forging ahead with a trade deal while the US heads in its own protectionist, isolationist direction, this is hardly a time for optimism. Following the Asian losses and a weak Wall Street on Friday, European equities are likely to open in boggy ground.

On the data front, the calendar has little of interest save Portuguese CPI and Russian GDP, but things will pick up later this week with top-tier releases including Japanese and German GDP on Tuesday and UK labour market figures on Wednesday.

Market signals

Asian session

  • Doubts about tax cuts ended an eight week-long stretch of gains on Wall St
  • Japan's Nikkei 225 closed down by a hefty 1.32% at 22,380.99
  • The sharp fall in the Nikkei 225 is a worrying sign of ongoing volatility in equities
  • Korea's Kospi Composite lost ground too; it closed down 0.50% at 2,530.35
  • Alibaba says shoppers splurged $25.5bn online on Singles' Day on Saturday
  • Shares in gaming firm Razer soared 30% on its debut on the Hong Kong Stock Exchange
  • Leaders from 21 Asia Pacific economies met at the APEC summit on November 10 to 11
  • Talks aimed at reviving the Trans Pacific Partnership were held at APEC
  • A watered-down trade pact with fewer members, TPP 11, will take effect in 2019
  • Saudi Arabia has called for an urgent meeting among Arab League ministers on Iran
  • Uber is on the verge of reaching an agreement to sell a stake to Japan's SoftBank
  • The S&P/ASX200 closed down 0.13% at 6,021.80; it was weighed down by two banks
  • Amazon says it will launch in Australia with a full retail and marketplace offering

Forex ahead

  • Domestic political instability is weighing on AUDUSD; it was worth 0.7663 at 0536 GMT
  • Pressure on PM Therese May over poor progress in Brexit talks is weighing on the GBP

In opinion

Heading into the red
Asian equities look set to fall as the week gets underway, with no sign of any easing in the recent surge in volatility, says the team at Saxo Capital Markets Australia.

Trade pact
Eleven countries have agreed on 'core elements' in a regional trade pact from which the US pulled out earlier this year, writes the team at Saxo APAC Sales Trading.

Catalyst watch
As 2017 draws to a close, we focus on likely upcoming catalysts, such as Federal Reserve events and the US tax plan, writes Kay Van-Petersen in his regular Macro Monday column.


Talks aimed at reviving the Trans Pacific Partnership without the US were held on the sidelines of the APEC summit in Danang,Vietnam. Photo: Shutterstock

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