June 19, 2017 / 7:22 AM / 2 years ago

Daily Briefing: Brexit kick-off in Brussels

LONDON (Reuters) - Pretty much a year to the day after Britain voted to leave the EU, talks begin today on how that will happen, with Brexit minister David Davis due to meet chief EU negotiator Michel Barnier at the European Commission headquarters at 0900 GMT.

European Union flags flutter outside the EU Commission headquarters in Brussels, Belgium June 14, 2017. REUTERS/Francois Lenoir

Officials on both sides are playing down prospects of major progress in this first encounter: probably the best to hope for now is simply an improvement in the often tense atmospherics between the two sides.

The EU wants the talks to focus initially on the rights of EU expats living in Britain and working out how much Britain must pay out as it leaves the bloc; Davis is on record as disagreeing with that schedule, insisting the talks should also deal with the future relationship between the two sides.

Davis and Barnier are due to give a joint news conference after talks among their teams lasting seven hours.

France used to be known as a country where the same old faces turned up in politics year after year, decade after decade. How ironic, then, that what is the most dramatic regeneration of a political class seen in Europe for decades should take place with record low turnout of barely 42 percent.

With Emmanuel Macron in the Elysee and his debutant LREM movement in parliament with a solid majority, the Socialist Party risks extinction and conservatives are casting around for a strategy as the main opposition party. Marine Le Pen has won a seat in parliament but her National Front now also looks diminished and faces questions about its future.

Yet the major focus now will turn rapidly to how Macron will use his power. As Francois Hollande found to his cost, if you squander the first 12 months you may end up with meagre results.


World markets have greeted the new week by pushing higher again after a series of technology and retail sector wobbles last week amid a hawkish tilt by U.S. and UK monetary authorities.

Wall St stocks ended marginally in the black late on Friday, impressive given the mounting economic data misses now being recorded stateside as futures markets doubts grow about whether the Federal Reserve will be in a position to raise interest rates again for the third time later this year.

Citi’s economic surprise index for the United States is now the most negative it’s been for almost 6 years following another series of sub-forecast U.S. economic readings for May on Friday, including housing starts.

Futures markets now put less than a 40 percent chance the Fed will pull the trigger on interest rates again by December. NYC Fed chief Dudley and Chicago Fed chief Evans speak later on Monday. The dollar and Treasury yields were steady first thing Monday, meantime, with Asia stock markets – from Shanghai and HK to Tokyo and Seoul – all up between 0.4 percent and 1.0 percent. European bourses were set to open up by a similar amount.

Sterling was steady and FTSE futures were up early on Monday as formal negotiations between Britain and the European Union on the UK leaving the bloc were set to start in Brussels on Monday.  

UK finance minister Hammond indicated over the weekend that the government should prioritize growth and jobs in seeking a Brexit deal but stopped short of saying the country should remain in EU’s single market.

There was no obvious reaction in markets to the latest terror incident in London, where a van rammed into worshippers at a mosque overnight and killed at least one person.  German bund futures opened lower, with the new party of French President Macron getting an overall majority in French National Assembly elections on Sunday – albeit less than some had expected only last week.  Brent crude oil was steady just above $47.

Editing by Andrew Heavens

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