Nov 14, 2018, by Lorcan Roche Kelly
Now, the hard part
The draft agreement on the U.K.’s exit from the European Union reached yesterday will be presented to government ministers in London today when Prime Minister Theresa May asks the cabinet to back the proposal. Should she get through this unscathed, she then faces the much bigger challenge of getting it passed by a parliamentary vote. Already Northern Ireland’s DUP, whose MPs support the minority Conservative government, have come out against it, while the opposition Labour party have also indicated they won’t support it. With the parliamentary vote not expected until closer to Christmas, there’s still a long way to go to seal the deal.
Oil price action has moved from a selloff to a collapse, with West Texas Intermediate plunging 7.1 percent in yesterday’s session. The latest leg-down in the price came after OPEC warned that demand for its crude is falling faster than expected. A barrel of WTI for December delivery was virtually unchanged at $55.75 by 5:45 a.m. Eastern Time as the International Energy Agency welcomed the oil market’s return to surplus.
Park the car (tariffs)
The Trump administration will hold off for now on imposing new tariffs on imported automobiles, according to two people familiar with the matter. Shares of Japanese car manufacturers jumped. It will also be good news for Germany where the economy shrunk for the first time since 2015 in the third quarter as the car industry there took a hit on the emissions scandal. China, the target of many of the White House’s tariff moves to date, will be able to handle the trade war just fine, according to a major European miner.
Overnight the MSCI Asia Pacific Index slipped 0.3 percent while Japan’s Topix index closed 0.2 percent higher, helped by the rally in automakers. In Europe the Stoxx 600 Index was 0.6 percent lower by 5:45 a.m. amid disappointing economic data and caution about the prospects of the Brexit agreement. S&P 500 futures pointed to a lower open, the 10-year Treasury yield was at 3.138 percent and gold was down slightly.
At 8:30 a.m. U.S. inflation numbers for October are published, with the data expected to show a pickup in price growth to 2.5 percent, from 2.3 percent previously. Look to Fed Chairman Jerome Powell’s discussion on the economy with Dallas Fed President Robert Kaplan at 6:00 p.m. for any indication on whether the number will do anything to change the policymaker’s thinking on the rate path. In earnings today Cisco Systems Inc., Macy’s Inc. and Canada Goose Holdings Inc. are all due to report.