July 5, 2018 / 7:34 AM / a year ago

Daily Briefing: Europe's migrant fixation

LONDON (Reuters) - Just under 46,000 migrants and refugees have entered Europe by sea this year so far, less than half the total for the same period last year and about a fifth of that for the first six months of 2016. And yet many of Europe's leaders can apparently think of nothing else.

Migrant women intercepted aboard two dinghies off the coast in the Strait of Gibraltar stand after arriving on a rescue boat at the port of Tarifa, southern Spain, July 4, 2018

It will be high on the agenda when Angela Merkel welcomes Hungary's Viktor Orban to Berlin later today, while Austrian Chancellor Sebastian Kurz will discuss tighter national border controls with Merkel's interior minister Horst Seehofer in Vienna.

Austrian Alexander van der Bellen will also be at it in separate talks with the presidents of Slovenia and Croatia, and it will also be at the core of the meeting between Italy’s interior minister Matteo Salvini and Libyan Deputy PM Ahmed Maiteeg in Rome.

Europe remains a long way away from a properly coordinated policy on migration. But the diplomatic hyper-activity is guaranteed to keep migrants in the headlines, much to the satisfaction of Europe’s far-right.

In the meantime, tightening borders threaten real harm on the region's wealth. The IMF cites rising protectionism (read Donald Trump's talk of German auto tariffs) and the risk of a hard Brexit as reasons for its downgrade of the German growth outlook this morning.

Separately, Britain's biggest carmaker Jaguar Land Rover is warning that hard Brexit would cost it 1.2 billion pounds a year and curtail its future operations in the United Kingdom.

Such a disclosure comes a day before PM Theresa May meets cabinet colleagues to try once again to establish a policy on Britain's future trading relationship with the EU: a new, tech-focused solution on how Britain maintains frictionless trade with the rest of Europe despite leaving its single market has been leaked out this morning already.

From the early details available, it looks to have a few things in common with two schemes already dismissed out of hand by Brussels.


The absence of Wall St overnight hasn’t helped Asia stock markets much first thing Thursday, with another 1 percent loss in Shanghai bringing it back close to the year’s low and clocking losses of almost 24 percent from January’s peaks. The yuan drifting back lower again too as a brief rally on the People’s Bank of China verbal intervention earlier this week petered out again.

U.S. measures are essentially attacking global supply and value chains. To put it simply, the U.S. is opening fire on the entire world, including itself

With few new developments in the trade war saga, markets have simply focused on Friday’s scheduled implementation of U.S. tariffs on some $34 billion of Chinese goods, and Beijing’s promised lock-step retaliation. HK lost another 1 percent overnight too, with Tokyo’s Nikkei off about 0.8 percent and Seoul’s Kospi down 0.4 percent.

World growth barometers continued to nudge lower, with U.S. 2-10 year Treasury yield curve clinging on to levels just above 30 basis points and industrial metals prices near their lowest of the year. Copper was down slightly from Wednesday’s close, but above yesterday’s 9-month intraday low.

European markets look steadier, however, with euro stocks futures making a flat to firmer open and euro/dollar back above $1.17 for the first time in more than a week. For all the nerves about the hit to world industry from an escalating trade war between the United States and China, June service sector business surveys for Europe and other parts of the world were surprisingly upbeat.

European economic surprise indices are now at their least negative since March. What’s more, there were some hopes U.S. threats of tariffs on European automakers would also be put on ice.

Pro-EU supporters wave flags outside the Houses of Parliament in London, July 4, 2018

According to German newspaper Handelsblatt, the U.S. ambassador to Germany told German car bosses that U.S. President Donald Trump would suspend threats to impose tariffs on cars imported from the European Union if the bloc lifted duties on U.S. cars. Adding to slightly more upbeat mood, data out first thing on Thursday had German industry orders bouncing back in May with a rise of 2.6 percent.

The euro was also helped by reports that some European Central Bank officials were uneasy about delaying an interest rate rise to late as the end of 2019. Fed policy meeting minutes and the release of private sector U.S. jobs numbers for June will dominate later.

— 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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