August 3, 2018 / 7:37 AM / a year ago

Daily Briefing: May and Macron talk Brexit at Mediterranean retreat

LONDON (Reuters) - The Elysee Palace is adamant that this evening's meeting between Emmanuel Macron and British PM Theresa May at Macron's Mediterranean holiday retreat is not an attempt to sidestep the Brexit negotiation in Brussels.

That said the dinner talks come at a crucial time and may help the process lurch forward. There are already signs, evident since the UK published its latest Brexit proposals in a White Paper, that the EU is keen to help May avoid a rebellion in Westminster and so reduce the risk of a “no deal” exit.

The article published by the EU negotiator Michel Barnier in various newspapers yesterday re-stated Brussels' red lines but also included the promise that the EU and UK could attain a trade deal of "unprecedented" scope if things went well - something that will help May defend her Brexit strategy back home.

There is also speculation in UK media that Angela Merkel’s relative silence on Brexit in past weeks is a sign that she is becoming more ready for compromises. Others meanwhile point out that British leaders have a habit of misreading the German leader - notably when David Cameron wrongly thought she was on board for a shake-up of EU freedom of movement rules that would help him romp home in the Brexit referendum.


World markets are ending the week with a plethora of highs and lows from country to country and stock to stock, even without an overall aggregate direction. Wall St was drawn higher as Apple topped the $1 trillion milestone on Thursday, while Shanghai stocks continue to push lower on Friday on U.S.-China trade war fears.

The dollar is firmer across the board ahead of the U.S. July employment report later on Friday, with forecasts for another 190,000 rise in payrolls last month.

Italian bond yields pushed higher for the second day amid nerves about the Italian banks’ second quarter earnings reports and speculation about the position of pro-EU economy minister Tria within the new coalition government. Euro/dollar nudged lower first thing as a result, eyeing levels not seen since June.

Turkey’s lira sunk further to new record lows ahead the release of inflation numbers there and after this week’s U.S. sanctions hit against members of President Tayyip Erdogan’s government.

Sterling steadied after losses against the dollar and euro on Thursday when the Bank of England raised interest rates by a quarter percentage point but flagged no more than one more rate rise per year over the coming years as the most likely trajectory for further tightening.

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Russia’s rouble and government bonds steadied after a jolt on Thursday when two senior U.S. senators proposed a bipartisan move for more sanctions on Russia, including measures affecting holdings of its government debt.

More generally, Asia stock markets beyond Shanghai were more stable, with South Korea’s Kospi outperforming with gains of 0.8 percent. European stocks, impressed by decent Q2 earnings season, are set to open higher - with banks in particular coming in ahead of forecast. Credit Agricole and RBS were two cases in point today. U.S. stock futures are little changed.

— A look at the day ahead from European Economics and Politics Editor Mark John and EMEA markets editor Mike Dolan. The views expressed are their own —

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