LONDON (Reuters) - The next few days could be decisive in assessing whether the Catalan secessionist drive is running out of steam.
After an anti-independence rally at the weekend drew hundreds of thousands of people onto the streets, the campaign of civil disobedience urged by pro-independence leaders has so far seen little take-up; moreover, two pro-independence parties have said they will stand in the early regional elections called by Madrid - a de facto recognition of the current reality of direct rule.
Catalan leader Carles Puigdemont, who stands accused by the state prosecutor of rebellion and sedition, is due to make a statement from somewhere in Belgium today, with much speculation about whether he will say he is seeking political asylum there. Even if he does, it is not clear how Belgium would gain from granting him such asylum - a move which could be interpreted as recognising that he is suffering from some kind of political persecution.
While Spain’s EU peers have not always applauded Mariano Rajoy’s tactics in this stand-off, they have so far stuck firmly behind him on the principle of national unity.
The number of newspaper columns looking at how Brexit could be reversed or indefinitely postponed has grown in recent weeks - and will continue to do so in coming months if the economy continues to show weakness and as Brexit negotiations get closer to crisis point.
British Prime Minister Theresa May holds a cabinet meeting today at which she will discuss planning for Brexit, and notably possibly contingencies in the event of a “no deal”. That and the continued lack of clarity about what a possible transition deal would look like will also form the meat of Brexit minister David Davis’ encounter with House of Lords lawmakers.
Good news for French President Emmanuel Macron, as data out this morning show France’s economy expanded at its fastest pace since 2011 in the third quarter, boosted by acceleration in consumer spending and robust investment. The 0.5 percent increase meant gross domestic product expanded 2.2 percent over a year - meaning the current annual growth target of 1.7 percent is likely to be surpassed, making Macron’s goal of cutting France’s budget deficit easier to reach.
The tech earnings halo continued to shine over Asia stock markets overnight despite Wall St's stumble on Monday on the deepening investigation into the Trump administration's pre-election Russian links and also on reports of a possible phased-in cut in U.S. corporate tax rates.
Overall, the MSCI world index nudged higher on Tuesday, within a whisker of Monday’s all-time high and closing out October with the 12th straight monthly gain – the longest winning streak in its 30-year history.
The S&P500 dialled back from its latest records late yesterday and the dollar and Treasury yields slipped as U.S. special investigator Robert Mueller indicted Trump’s former campaign manager Paul Manafort for money laundering amid links to Ukraine’s former pro-Russian leader. Another former campaign adviser pleaded guilty to lying to the FBI over contacts with Russian officials.
The reports on phased-in tax cuts added to the market caution, as did indications that Federal Reserve governor Jerome Powell, a policy centrist, was likely to be announced as the next Fed chair on Thursday.
But Asia stocks shrugged off Wall St’s wobble, with Seoul’s Kospi index advancing almost 1 percent to record highs after robust Samsung results and on news that Beijing and Seoul had normalised diplomatic relations after a recent row over U.S. missile defence.
Other tech-heavy indices, such as Taiwan, pushed higher as Apple results are awaited this week. Tokyo was held back by a weaker dollar/yen rate and as the Bank of Japan left monetary policy unchanged as expected. Shanghai and Hong Kong stocks were flat as the latest Chinese business surveys came in below forecast.
European stocks were expected to open higher after earnings from oil major BP, French bank BNP Paribas and aerospace and defence firm Airbus. BP's shares are seen rising 2 percent after it reported profits that beat forecasts and announced a share buyback.
Brent crude hovered just below Monday’s two-year high of $61 per barrel. Now more than 40 percent of the way through the European Q3 earnings season, and around 65 percent of companies have either met or beaten expectations, according to Thomson Reuters I/B/E/S data.
After a sharp drop in euro zone periphery bond yields over the past few sessions, meantime, debt markets steadied ahead of the latest euro zone October inflation data and third-quarter GDP numbers later on Tuesday.
After recent electoral law changes, ratings upgrade and ECB QE extensions, Italian bond yields are set for the biggest monthly fall since July 2015. Euro/dollar was a touch lower about $1.1630.
Editing by Larry King