November 27, 2018 / 8:34 AM / 6 months ago

Daily Briefing: Brexit deal on tour - December 11 countdown

LONDON (Reuters) - As Theresa May sets out today to sell her Brexit deal to the country ahead of a crunch December 11 parliamentary vote, it wasn't exactly helpful that Donald Trump said he thought it would make future UK-U.S. trade more difficult.

Prime Minister Theresa May makes a statement in the House of Commons, November 26, 2018

Downing Street immediately rejected that interpretation and pointed out that preparatory work for a future trade pact was already underway. Still, various critics of the deal have jumped on Trump’s comments as proof that it is a dud.

The first leg of May’s nationwide tour today will have her meet politicians, students, academics, community and religious leaders in Northern Ireland and similarly broad spectrum in Wales.

Separately in Luxembourg, Europe's top court will hold an urgent hearing on Tuesday over whether Britain can unilaterally reverse its decision to leave the EU - a case supporters of membership hope could pave the way to a second referendum and ultimately stop Brexit.

In the end, Italy's leaders stuck with their budget plans in a meeting last night but left open the possibility of eventually cutting its deficit target. Earlier on Monday, two sources had told Reuters the coalition may reduce next year's deficit goal to as low as 2 percent of gross domestic product from the 2.4 percent currently projected in order to avoid disciplinary action from Brussels.

There is still wiggle room in the costing and timing of the government’s flagship projects - including bringing forward the retirement age and introducing an income support plan for the nation’s army of poor and unemployed.

So far, there is no formal talk of new sanctions on Russia after its seizure of Ukrainian vessels, but an ally of German Chancellor Angela Merkel has come out this morning and said he would not rule them out.

Norbert Roettgen, a member of Merkel’s Christian Democratic Union who chairs the German parliamentary foreign affairs committee, said Russia’s behaviour was deeply worrying and that tougher sanctions were an option.

Merkel herself has stressed the need for dialogue while the European Union, Britain, France, Poland, Denmark, and Canada all condemned what they called Russian aggression. For now, the rouble has rebounded somewhat after its falls yesterday on sanctions fears.

Today, Russian Foreign Minister Sergei Lavrov is due to meet his French counterpart Jean-Yves Le Drian in Paris. Some of the Ukrainian sailors on board the vessels are scheduled to appear in a Crimean court at around 1100 GMT.


Not for the first time, U.S. President Donald Trump has thrown a curve ball into world markets – with his overnight Wall Street Journal interview jarring Chinese stocks, the yuan, Apple shares, U.S. stock futures and even sterling.

Despite some hopes of a easing of Sino-U.S. trade tensions at this week’s critical G20 summit in Argentina, Trump said he expects to raise U.S. tariffs on $200 billion of Chinese goods to 25 percent from 10 percent on Jan 1 as planned and only further opening up of Chinese markets to competition would lead to some sort of deal.

While Shanghai stocks lost all their early gains to trade slightly in the red by the close, losses in U.S. and European stock futures were briefly reversed in early European trade after a report that Chinese officials indicated some compromise might indeed be on the table.

The S&P500 had gained 1.5 percent on Monday before the WSJ interview. In the newspaper article, Trump added that the next round of tariffs on $267 billion of goods not already sanctioned could hit laptops and Apple’s iPhone imported from China. Apple’s shares fell nearly 2 percent in extended trading late Monday.

On Brexit, Trump criticised UK PM Theresa May’s deal with the European Union – for which she is currently struggling to gain domestic support ahead of a pivotal Dec 11 parliamentary vote – and said the agreement as it stands might not allow the UK to seek a direct trade deal with the United States and that was not what the UK had “meant”. Sterling fell against the dollar to its lowest level since Nov. 16 and slipped against the euro too.

Italian sovereign bond yields remained lower after Monday’s drop amid signals from Rome it was prepared to compromise with the EU on lowering its 2.4 percent budget deficit target for next year, if not the main pillars of that expansionary budget – namely the citizens income and pension reform.

U.S. President Donald Trump gestures during a Make America Great Again rally in Biloxi, Mississippi, November 26, 2018

Russia’s rouble bounced 0.6 percent, clawing back half of the previous day’s losses, when investors sold Russian assets after escalating military tensions between Kiev and Moscow. However, there are some indications the latest developments will add to pressure for fresh sanctions on Moscow, with an ally of German Chancellor Angela Merkel saying Europe may have to do so.

In corporate news, Thomas Cook shares fell more than 20 percent at the open after the travel firm cut its earnings forecast for the second time in two months.

— 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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