June 6, 2017 / 7:36 AM / 7 months ago

Daily Briefing: Security matters in UK election

LONDON (Reuters) - The UK election remains Europe's top political story with security issues making their way into the campaign after the weekend attack by London Bridge.

Normally that should play to the Conservative hand but this time PM Theresa May is vulnerable to accusations that she cut police numbers and so made British streets less safe. A Survation poll taken before the attack had her lead over Labour narrowing to just one point, two survey published later today will show whether there has been a new trend since.

As his new party looks on course to win a majority in parliamentary elections starting this weekend, French President Emmanuel Macron's government is due later to present trade unions with an outline for negotiating labour reform, potentially among the most sensitive measures of his planned proposals. A statement to media is expected around 1315 GMT; some unions are already planning protests.

The Italian lower house of parliament debates a new electoral law put forward by Matteo Renzi's PD party which is essentially a mix of first-past-the-post and proportional representation. Critics say it favours the PD, which has a strong grass-roots presence across Italy, and penalises smaller parties, as well as the anti-establishment 5-Star Movement. The PD has the numbers to get the law through the lower house, but might struggle in a subsequent vote in the Senate upper house.


Britain's Prime Minister Theresa May speaks during an election campaign event in Bradford, Britain, June 5, 2017. REUTERS/Phil Noble

Much in global macro markets at the moment is being seen through the prism of inflation and oil prices and it’s in that light that the story on Qatar’s regional isolation has had reverberations. After initially lifting Brent crude back above $50 on Monday amid fears Gulf tensions may lead to supply disruptions, oil markets quickly reassessed the rift between Qatar and a Saudi-led group including UAE, Bahrain and Egypt as possibly undermining the recent agreement on OPEC production cuts.

Brent has relapsed back below $50 since to trade about $49.50 early on Tuesday. The combination of weakening energy prices, now negative in year-on-year terms, and another round of sub-forecast U.S. economic numbers – this time from ISM service sector readings for May – has dragged U.S. Treasury yields and the dollar back lower again. The dollar index has fallen to its lowest level since the U.S. election last November.

Jeremy Corbyn, leader of Britain's opposition Labour Party speaks at an election campaign event in Newcastle, June 5, 2017. REUTERS/Andrew Yates

U.S. economic surprises, captured by Citi’s indices, have moved deeper into negative territory and are at their lowest since February last year. Another U.S. interest rate rise this month is still consensus, but there are growing doubts about whether another will follow later in the year.

Euro/dollar has been buoyed further, meantime, ahead of this week’s European Central Bank meeting, where some signalling of a further wind-down of the ECB’s bond-buying stimulus programme is seen as possible. Thursday’s Senate testimony by former FBI chief Comey on links between the administration of U.S. President Trump and Russia is also unnerving the dollar to some degree.

Wall St stocks ticked lower late Monday, led by a 1 percent fall in Apple’s share price. Japan followed with losses of almost 1 percent. European stocks, where Germany’s DAX returns after a holiday on Monday, are expected to fall about 0.3 percent.

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