August 24, 2017 / 7:48 AM / 2 years ago

Daily Briefing: Macron's mission - a protective EU

LONDON (Reuters) - Emmanuel Macron has got the backing of his Czech, Slovak and Austrian counterparts for a tightening of EU cross-border labour protection laws and will be pleading the case in Romania today before heading off to Bulgaria. The specific issue relates to "posted workers" sent to work in one country by a firm based in another, mostly with weaker welfare rights.

Slovakia's Prime Minister Robert Fico, French President Emmanuel Macron, Austrian Chancellor Christian Kern and Czech Republic's Prime Minister Bohuslav Sobotka pose for photographers in Salzburg, Austria, August 23, 2017. REUTERS/Heinz-Peter Bader

It only affects about one percent of EU workers but, in line with his campaign promises, Macron wants to use this to show his audience back home that he is fighting for a Europe where worker rights are protected.

By now the pattern of Britain's Brexit position papers has become clear: propose something which looks as close as possible to the existing EU arrangement while not replicating it completely. This is true of today's contribution on data protection rules, which hopes to reassure businesses and law enforcement agencies that there will be no disruption to exchanges of information.

Brussels, meanwhile, is more focused on making progress on the issues on the table, notably how much of a divorce bill Britain will have to pay. It could be a prickly re-start to negotiations when talks resume next week.

Dutch police are questioning a Spanish man detained with gas canisters in a van while driving near a venue where a rock concert was cancelled last night because of a threat of an attack. Spanish police had tipped the Dutch to potential danger at a venue where California band Allah-Las was set to play. A judicial source says there was no link to the attacks in Spain last week, but Dutch police are still trying to establish his identity.


The dollar is up against some of the other major currencies, after taking hit on Wednesday, which was brought on by worries over a possible U.S. government shutdown as Congress faces a decision over raising its ceiling on how much the world’s biggest economy can borrow.

U.S. President Donald Trump said on Tuesday he would risk a shutdown if he did not get the funds to build a wall on the Mexican border. A report from Fitch Ratings on Wednesday that failure to raise the debt limit could jeopardise the triple-A U.S. sovereign rating brought the issue into focus.

Nerves have settled on Thursday – the dollar is up 0.2 percent against its currency basket – but traders remain wary of further bouts of dollar weakness as the debt ceiling deadline in late September approaches. In Asia, the dollar gained against the yen, which often rises in times of market stress as Japanese investors repatriate their assets.

The debt ceiling worries and nerves before the Jackson Hole symposium of central bankers, which begins later on Thursday, also pushed core U.S. and German debt yields lower on Wednesday, but they are up a shade on Thursday. German 10-year bonds were yielding 0.38 percent, a basis point off Wednesday’s lows.

European shares are expected to open barely changed after Asians shares chalked up gains of 0.4 percent, according to MSCI’s main measure of Asia-Pacific stocks, excluding Japan. Tokyo stocks hit three-and-a-half-month lows, dragged down by a stronger yen and falls on Wall Street.

The European pharma sector, which has underperformed over the last year amid concern over pricing power and a rotation into cyclical, could be in focus after Novartis said its drug Kisqali received EU approval as a treatment for breast cancer, bolstering the Swiss drugmaker' s bid to challenge rival Pfizer's Ibrance.

On the earnings front, Britain's Dixons Carphone could be hit after it downgraded expectations for full-year profit, reflecting tougher conditions in the mobile market as customers hold on to handsets for longer.

The earnings season in Europe is drawing to a close, with almost nine out of 10 companies on the MSCI Europe having reported results. While more than two-third of companies have topped expectations in the United States, the picture in Europe is mixed with 55 percent of earnings beating forecasts and 39 percent missing.

Other stock movers: Premier Oil lifts production guidance as fields exceed expectations; Audi board to decide on management reshuffle on Monday - sources; Roche says FDA grants priority review to haemophilia drug emicizumab; GE, ABB restart talks over industrial solutions deal -sources; Vivendi, Telecom Italia send in views on ownership issue -source; Lufthansa eyes Air Berlin's Niki as bidders jostle for position.

Emerging market equities rose to three-year highs with Hong Kong and Taiwan stocks leading the gains in Asia, the latter up 0.8 percent. Chinese mainland shares fell 0.5 percent, led by a 6.7 percent fall in telecom company China Unicom after the share price rose earlier in the week. Profits at China’s state-owned companies rose 23.1 percent in January-July from a year earlier. China said it would use all necessary measures to defend itself and its companies against a U.S. trade investigation.

The South African rand slipped 0.26 percent after consumer price inflation retreated to its lowest in nearly two years on Wednesday, improving the chances of further interest rate cuts. The Turkish lira weakened 0.2 percent but was still trading near a two-month high against the dollar.

The Mexican peso steadied after coming under pressure on Wednesday when Trump warned he might terminate the NAFTA treaty and made his threat to shut down the U.S. government to secure funding for a wall along the U.S.-Mexico border. Mexico and Canada have dismissed Trump’s NAFTA threat as a negotiating tactic.

Venezuelan sovereign and PDVSA dollar bonds fell to their lowest levels since May and April 2016 respectively, extending Wednesday’s losses after a report that the U.S. government was considering a ban on trading in the country’s debt.

Polls have closed in Angola’s parliamentary elections, expected to usher in the ruling party’s defence minister as the first new leader for 38 years. An unofficial result is expected by Friday. Angolan dollar bonds steady ahead of the results.  

Metals prices are still riding high. Nickel is just up on supply worries but $100 a tonne below the $11,825 level it hit on Wednesday. Copper is up 1 percent at $6,628 a tonne. Brent crude oil was flat at $52.58, holding on to Wednesday’s gains on a fall in U.S. inventories.

Editing by Larry King

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