June 5, 2018 / 7:35 AM / 2 months ago

Daily Briefing: Brexit - open questions

LONDON (Reuters) - Business leaders left a Downing Street meeting last night scratching their heads about what Brexit will look like and when they would get greater clarity on how it would affect their companies. To their point that frictionless trade was the priority, their hosts only said a decision on what future trading relationship the UK would seek to get was "imminent".

Sir Roger Carr, Chairman BAE Systems, and Robert Noel, Chief Executive Landsec, arrive for a meeting with Prime Minister Theresa May in Downing Street in London, Britain, June 4, 2018. REUTERS/Peter Nicholls

Separately, the FT reports this morning that British PM Theresa May has decided to delay publication of a 150-page white paper on future ties until after a June 28-29 summit with the EU - if true, that would be contrary to what the government was saying only two days ago.

This all comes as UK and EU negotiators meet again today for new talks characterised so far by slow-boiling frustration on the EU side about what the UK actually wants.

Prime Minister Giuseppe Conte will make his inaugural speech to Italy’s upper house Senate today laying out the policy priorities of his coalition 5-Star-League government, western Europe's first anti-establishment administration.

The upper house will then hold a vote of confidence, which his government is expected to win given their majority.

A similar debate and vote will be held in the lower house on Wednesday. Financial markets will be on the watch for clues on the future stance on the eurozone and the economy, including how aggressively the new government will seek to row back on some of the liberal Renzi-era reforms.

No prizes for guessing what Israeli Prime Minister Benjamin Netanyahu will want to discuss with France’s Emmanuel Macron when they meet in Paris tonight.

He is on a tour of Europe to persuade its capitals to follow Donald Trump in ditching the 2015 nuclear deal with Iran.

In Berlin last night he warned Angela Merkel that Iran’s activities across the Middle East threaten to drive another wave of refugees to Europe; Merkel countered by arguing the nuclear accord was the best way of containing Iran.

MARKETS AT 0655

A record closing high for the technology-heavy U.S. Nasdaq stock index on Monday is quite a moment given all the disruption of the past month and shows many investors continuing to play what they see as long-term secular trends while the rest of the market is trying to second-guess political and policy twists or the length of the current cycle.

The Nasdaq came just 0.39 percent shy of its intraday peak from March, helped by a plethora of positive stories from the likes of Apple and Microsoft.

The S&P500 ended almost half a percent higher on the day too but, although back in the black for the year, is still more 4 percent from January’s record high.

People pass by the Nasdaq Market Site in Times Square in New York City, U.S., February 7, 2018. REUTERS/Brendan McDermid

The buoyancy is all the more the impressive coming just a week before the widely expected second U.S. interest rate rise of the year and smouldering international trade tensions.

Asia’s major bourses all followed suit overnight, with gains from Shanghai to HK, Tokyo to Seoul.

Hopes of some détente between the Western powers over U.S. trade sanctions hinge on the weekend’s G7 summit in Quebec, where the European powers will also get a chance to meet and greet Italy’s new delegation.

Signs that the world economy picked up steam again late in the middle second quarter have helped lift world stocks, as has some easing of political tensions in Europe.

Service sector business surveys for May are released around the world today and are another important marker on activity.

There are also some hopes that the market scare surrounding Italy’s new government will spur Germany and France into faster reforms of euro zone institutions and the European Stability Mechanism, as flagged by Chancellor Merkel at the weekend.

Several set-piece events from European policymakers will give some indications on progress around that - the upcoming G7 and this month’s EU summit on Brexit.

European Central Bank chief Draghi speaks at event celebrating the ECB’s 20th birthday, while EU Commission chief Juncker speaks in Brussels.

European stocks are set to open higher, with Italian and Spanish government bond yields steadying after four consecutive days of declines.

Eyes will be on Italian parliament’s vote on the new government later today.

U.S. Treasury yields were lower, but the dollar was firm across the board.

Brent crude futures bounced back a touch after Monday’s slide below $76.

On the corporate front, eyes are on RBS after the British government sold a 7.7 percent in the bank for 2.5 billion pounds, in a move that marks a loss for the British taxpayer but which brokers say was positive because it increases liquidity in the stock.

RBS share fell almost 4 percent after the open.

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. 

Editing by Andrew Heavens

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