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Daily Briefing: Is May fine-tuning Brexit timelines?
April 5, 2017 / 8:11 AM / 8 months ago

Daily Briefing: Is May fine-tuning Brexit timelines?

LONDON (Reuters) - British Prime Minister Theresa May's comments to reporters on Brexit during a visit to Saudi Arabia will probably attract scrutiny.

British Prime Minister Theresa May attends a meeting with Sarah al-Suhaimi, CEO of the Saudi Stock Exchange, in Riyadh, Saudi Arabia, April 4, 2017. REUTERS/Fayez Nureldine/Pool

According to various reports this morning, she suggested that free movement of people between Britain and the European Union could be extended during an implementation phase after Britain leaves the bloc, and further acknowledged that Britain would not finalise a new trade deal with the EU until after Brexit.

Is this part of a process by which May begins to gently disabuse the most ardent Brexiteers of their hopes that leaving the EU will be swift and painless?

Defying the Western consensus blaming Tuesday's mass deaths in the Syrian province of Idlib on forces loyal to Syrian President Bashar al-Assad, Russia has come out and said they were in fact the result of gas leaking from a rebel chemical weapons depot after an airstrike.

The least you can say is that this does not bode well for the chances later of any strong U.N. Security Council statement condemning Assad over the attack, as sought in a vote by the United States, France and Britain later on Wednesday.

Russia, backed by China, has already cast seven vetoes to protect Assad’s government from council action, most recently in February, blocking a bid by Western powers to impose sanctions.

Emmanuel Macron put in another solid performance last night in the latest televised debates ahead of France's presidential election, allowing him to maintain his position as favourite to win. There were sharp clashes with Marine Le Pen and one snap survey suggested he was seen by viewers as having the best policies. Financial markets will be relieved.


It’s been an edgy week for world markets with a plethora of competing political and economic influences but there appears to be some stabilisation over the past 24 hours. The hefty bid for relatively safe assets that started the week has petered out. Stock markets and bond yields are firmer, Wall St’s Vix volatility gauge fell back down below 12 percent, and the yen and gold are off Tuesday’s highs.

The most eye-catching market move is Brent crude's climb above $54.50 to its highest in a month, partly on unscheduled North Sea supply outage. With oil prices up about 8 percent in 10 days, this may well force a rethink from those returning to bonds this week.

The release of the March private sector U.S. jobs report from ADP later will be watched closely.

The overarching global event of the week still seems to be tomorrow's meeting between U.S. President Trump and China's President Xi in Florida, but any jitters about the outcome of what the White House said would be a 'difficult' meeting were not evident as Chinese markets returned from holidays on Wednesday.

Shanghai stocks outperformed regional bourses with gains of more than 1 percent, with some citing government plans for the development of a new economic zone called the Xiogan New Area along the lines of the Shenzhen zone started in 1980.

In Europe, snap opinion polls following the latest French presidential election TV debate on Tuesday showed Marine Le Pen in fourth place behind rival candidates, with centrist and current favourite Macron seen as having the most credible plan for office.

There was little obvious reaction in French debt prices early on Wednesday as that outcome confirms the existing consensus on next month’s outcome. More generally, the greater investor caution this week has plenty to support it.

Geopolitical tensions went up another notch on Tuesday with another chemical attack in Syria that the White House and other western governments blamed on Syrian government forces despite denials from Moscow that President Assad's forces were responsible.

South Africa's rand steadied after steep falls this week as the country's sovereign credit rating was cut to junk by S&P. Growing calls for President Zuma to step down, the latest from South Africa's largest trade union, may be seen as a potential positive for the currency.

Elsewhere, there’s growing speculation about the lifting of the Czech crown’s cap as the central bank sad last week it could happen at any time from this week on. Implied volatility in one-week and one-month euro/crown options have jumped sharply this week.

Editing by Catherine Evans

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