April 23, 2018 / 8:12 AM / 4 months ago

Daily Briefing: Macron to Trump - no Plan B on Iran

LONDON (Reuters) - French President Emmanuel Macron's main task during his three-day state visit to the United States starting today will be to convince Donald Trump that there is no viable alternative to the Iran nuclear deal, imperfect as it may be.

FILE PHOTO: U.S. President Donald Trump meets French President Emmanuel Macron in New York, September 18, 2017

Trump has vowed to scrap the 2015 accord, which put curbs on Iran’s nuclear program in exchange for sanctions relief, unless European allies make it less favourable to Tehran. This will be a major test of the improbable friendship that the cerebral Macron has nurtured with the arch-populist Trump - and whether it can actually deliver results. Most of the key meetings take place on Tuesday with a news conference afterwards.

Fresh from the biggest protests in years this weekend, Armenians are expected to take to the streets again today to protest against former president Serzh Sarksyan's appointment as prime minister. Critics say Sarksyan is clinging on to power with a tactic inspired by Vladimir Putin, who had a spell as Russian prime minister from 2008 before coming back as president in 2012.

In Armenia’s case, the twist is that Sarksyan’s new appointment comes as the prime minister role has been beefed up and the presidential position watered down to a more ceremonial post. The protests have been largely peaceful so far, although the detention of three opposition leaders has added to the anger.

The international contact group charged with aiding Basque militant group ETA with its planned dissolution next month will give more details today on how this will happen. The group declared a ceasefire in 2011 and handed over weapons caches in April 2017, bringing a close to Western Europe's last major armed insurgency.

It has apologised for the harm caused to victims and their relatives during its half-century-long violent campaign to create an independent state in northern Spain and southwest France.

MARKETS

Police officers disperse the crowd at a protest against the appointment of ex-president Serzh Sarksyan as the new prime minister in Yerevan, Armenia, April 22, 2018

World stock markets start a busy week of company earnings and economic updates in a slightly hesitant mood, with Asia bourses on the back foot despite advances for U.S. and European futures. The big U.S. tech and internet giants top the packed list of corporate earnings from both sides of the Atlantic later this week - with Google parent Alphabet out later on Monday followed by Facebook on Wednesday and Amazon and Microsoft on Thursday.

Jitters about ebbing smartphone demand led to a late week wobble for Apple’s stock price and the tech sector at large, though this may have been just positioning ahead of the earnings deluge. More important in gauging the overall health of the world economy, however, will be flash April business surveys from around the world out today – critical updates given the underwhelming past two months from these readings in Europe in particular amid questions about whether weather and calendar effects were distorting the signals.

The early signs so far are positive, with Japan’s PMI reading coming in ahead of forecasts. The European Central Bank’s meeting later this week makes the tone from these surveys all the more important for markets.

With oil and commodity prices on the rise again over the past couple of weeks, U.S. Treasury bond yields are pushing higher too toward 3 percent again – already at levels that spooked world markets back in early February.  Ten-year Treasury yields hit a high of 2.9790 percent in early trading – their highest level since January 2014, before that year’s spectacular oil price collapse. The contrast between U.S. and European monetary settings remains so pronounced that the gap between 10-year Treasury yields and German equivalents rose to its widest in 29 years early Monday at some 236 basis points.

Crude oil’s recovery since 2016 has started to accelerate over the past year amid supply cuts and synchronized global growth, with signals last week that Saudi Arabia was happy for oil prices to return toward $100 cited as an additional factor. Brent crude was just a fraction below Friday’s close early on Monday, hovering just below $74. Metals prices, lifted in part by the latest sanctions on big Russian mining firms, have also added to the commodity inflation anxiety of late. 

The dollar was higher first thing too, with dollar/yen just shy of February’s peaks as yen ‘safety’ trades unwound further as North Korea said at the weekend it would suspend nuclear tests.

UBS kicked off European bank earnings with a strong performance from its investment bank on higher market volatility, though the shares were seen falling at the open as the bank’s CET1 ratio fell short of expectations.

— 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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