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Daily Briefing: Norway's little kingmakers
September 11, 2017 / 7:18 AM / 2 months ago

Daily Briefing: Norway's little kingmakers

LONDON (Reuters) - From Britain to Austria and most of the countries of southern Europe, small parties have shown they have an uncanny knack of setting the broader political agenda in Europe even when they don’t officially have power.

Erna Solberg, Norway's Prime Minister and leader of the Conservative Party, attends an election campaign event in Oslo, Norway September 9, 2017

The same may be true after voting finishes today in Norway, with the two main groups - the centre-right bloc of incumbent Erna Solberg and the opposition Labour Party - too close to call in opinion polls. If neither gets an overall majority they would have to call on a combination of smaller parties from either left or right to secure power.

The nub is that some of these groups want to impose more or less draconian limits on exploration in Arctic waters off Norway’s northern coast: that would be something of a game-changer for the country’s crucial oil industry. Exit polls will be made public on Monday at 1900 GMT.

A noisy constitutional row has broken out ahead of the late-night vote planned today on Britain's EU withdrawal bill, repealing the original parliament act that took Britain into the club but then copy-pasting EU law into British statute books to ensure there is no legal void immediately after Brexit. Opposition MPs claim the decision to use so-called Henry VIII powers that allows legislation to be amended without full parliamentary procedure is an attempted power grab; the government counters that this is totally acceptable given the amount of minor tweaking that will be required as/if the nature of Brexit becomes clearer.

Brexit Minister David Davis is out warning that a vote against the government plans would be an undemocratic attempt to halt Brexit. At this stage the government thinks it has persuaded just enough of its allies to win the vote.

A gripping tale unfolded over the weekend with former Georgian president Mikheil Saakashvili and a crowd of supporters finally barging past guards to enter Ukraine from the Polish border on Sunday after a prolonged standoff between him and the Ukrainian authorities. Saakashvili, a hero of his own country's 2003 pro-Western uprising, was invited by Ukrainian President Petro Poroshenko to become a regional governor in 2014 and help reform Ukraine - but then they fell out with Saakashvili quitting as governor of Odessa in November and accusing Poroshenko of abetting corruption.

It is possible that Ukrainian authorities decide now to arrest Saakashvili, whose Ukrainian passport has been revoked. Either way, it has been fantastic free publicity for Saakashvili and any future political ambitions he may have.

Norway's Labour Party leader Jonas Gahr Store casts his vote in the Norwegian parliamentary election in Oslo, Norway September 10, 2017

MARKETS

World equity markets start the week on the front foot, with relief that North Korea did not test more missiles over the weekend an early driver. U.S. stock futures, Asia bourses, the dollar and U.S. Treasury yields are all higher, with European stocks set to follow suit. Gold, Swiss francs and yen are all lower.

The devastation of the Atlantic hurricane season so far is being monitored closely - with damage, reconstruction and insurance estimates being assessed – but perhaps the biggest macro market impact will be the potential distortion to U.S. economic readings for the next couple of months. Shares in re-insurance companies could be supported after the downgrade of Hurricane Irma fuelled expectations that insured losses could come down, averting a worst-case scenario for the sector.

Total insured losses for Irma are estimated by AIR Worldwide at between $20 billion and $65 billion. Europe’s insurance index is down over 6 percent from its August peak. Although off Friday’s 5-month peaks, Brent crude oil prices held firm above $54 per barrel.

Japan’s Nikkei outperformed in Asia earlier, gaining 1.4 percent as dollar/yen jumped almost a full yen from Friday to more than 108.50/$. South Korea’s index was up 0.7 percent as the North celebrated its 69th founding anniversary over the weekend rather than any fresh military preparations. China’s yuan eased back on Monday after almost two weeks of relentless gains and even as the official ‘midpoint’ set by the central bank was fixed below 6.5/$ for the first time since May 2016, reflecting last week’s rise.

The spot retreat came after Beijing on Friday lifted restrictive measures on yuan hedging, including the scrapping reserve requirements of 20 percent for financial institutions settling yuan forward positions – a move many suspected was aimed at reining in the currency’s recent sharp gains. China’s August inflation data, released Saturday, also came in ahead of forecasts. Shanghai and HK stocks closed higher.

The euro was lower against a broadly firmer dollar after last week’s ECB-related swings. With reports the central bank remains on course for gradual tightening of its monetary policy later this year, markets will keep close tabs on ECB speakers this week. French business climate readings for August pushed higher, with the Bank of France estimating Q3 gross domestic product growth 0.5 percent on the quarter, the same as Q2.

editing by John Stonestreet

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