March 12, 2018 / 8:39 AM / 10 months ago

Daily Briefing: Slovak government on the brink

LONDON (Reuters) - Yet another of Europe's governments is dangerously close to collapse, this time in Bratislava as part of a corruption intrigue that has caused a political earthquake in Slovakia.

Slovakia's Prime Minister Robert Fico reacts after a meeting of Slovakia’s three top officials at the Bratislava castle, March 9, 2018

Prime Minister Robert Fico’s junior coalition partners have said they will walk out of the alliance later today unless he dismisses interior minister Robert Kalinak. This comes after the still unexplained killing of investigative reporter Jan Kuciak, who probed fraud cases involving politically-connected businessmen, triggered the biggest street protests in decades on Friday.

"Keep calm but wash your clothes": Britain's official public advice to those who used a restaurant linked to a nerve agent attack in the city of Salisbury is raising questions over the government's handling of the affair. Even government-friendly media are talking about local "outrage" at the slowness of the response after former double agent Sergei Skripal and his daughter were found unconscious on a bench outside a local shopping centre last week.

Prime Minister Theresa May is due to chair a national security council meeting today; after her government was widely criticised for its handling of the fatal Grenfell Tower apartment block fire last June, she cannot afford to botch this new public safety emergency.

German Chancellor Angela Merkel's CDU/CSU will finally sign its coalition contract with the centre-left SPD this afternoon. Before that, she gives a joint 1100 GMT press conference with her coalition partners, as do others, including the far-right AfD which now is out to prove its mettle as an effective opposition party.


Back to square one? The February U.S. employment report was the perfect tonic for nervy stock markets around the world. The combination of robust job growth more than 100,000 above forecast, rising participation in the labour market and wage inflation ebbing from January’s peaks has been enough to reignite equity markets everywhere.

Is the Goldilocks economy of not-too-hot, not-too-cold growth still alive and well? Tuesday’s U.S. CPI inflation number may be needed to confirm that. Either way, the S&P500 surge more than 1.7 percent on Friday - staging its second best day of the year so far - and the warm glow extended around the globe on Monday, with S&P futures still up smartly this morning.

Ten-year U.S. Treasury yields are firm just above 2.90 percent, but broke little new ground after the jobs report as the softer earnings component kept Federal Reserve interest rate expectations in check. The dollar in generally weaker against the major currencies.

After gains of more than 1 percent on Friday, MSCI’s all-country index of world stocks is up another 0.4 percent today to its highest levels since Feb 27. Japan’s Nikkei255 is up 1.65 percent, HK’s Hang Seng is up 1.8 percent, South Korea’s Kospi is up 1 percent and Shanghai stocks are up 0.6 percent.

Eurostocks are set for gains of about 0.6 percent at the open too.  German bund futures are a touch firmer at the open. European Central Bank board member Benoit Coeure told French radio first thing on Monday that short term interest rates are likely to remain at "very low levels" in the euro zone “far beyond the horizon of our asset purchases."

Reverberations from the U.S. trade tariff plans have taken a back seat for the moment, with delegations from around the world now lobbying Washington for exemptions from the steel and aluminium barriers President Trump says will be considered on a case-by-case basis. Still, auto stocks could underperform after Trump tweeted that if the EU retaliates against steel tariffs by placing higher tariffs on American goods, the U.S. would "tax cars etc.".

Elsewhere, the weakening of the ‘safe-haven’ yen on last week’s easing of North-South Korean tensions and the proposed summit between Trump and the North Korean leader Kim Jong-un has not extended further. Japanese stocks and the yen rose on Monday despite reports Prime Minister Abe has come under renewed fire over suspicions of cronyism involving the sale of state-owned land.

There was little market reaction as China removed presidential term limits from its constitution at the weekend, giving President Xi the right to remain in office indefinitely. Germany’s coalition government finally signs its agreement later on Monday and euro group finance ministers meet later in Brussels.

— 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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