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Daily Briefing: May's majority in doubt
May 31, 2017 / 7:22 AM / 6 months ago

Daily Briefing: May's majority in doubt

LONDON (Reuters) - YouGov's latest poll, an attempt to map its survey results on the UK's constituency-based electoral system, has produced the shock conclusion that the June 8 vote will produce a hung parliament.

British Prime Minister, Theresa May visits Simon Jersey, a business uniform supplier in the Constituency of Hyndburn in Accrington, England, May 30, 2017. REUTERS/Leon Neal/Pool -

Even given the recent narrowing of PM Theresa May’s lead, that is an outcome that neither the Conservative nor opposition Labour Party were banking on and would shed an entirely different new light on the British position in forthcoming Brexit negotiations.

For now it should be taken with a pinch of salt: even YouGov concedes the methodology is volatile, with small changes in the raw data producing radically different results. But it certainly adds extra zest to the last week of campaigning and raises further questions over May's goal of scoring a landslide win.

Plus ca change? A whiff of sleaze has been blowing over Emmanuel Macron's new government even before the parliament elections he hopes will give him a pro-reform majority.

Richard Ferrand, minister for territorial planning, faces questions over his financial dealings six years ago when he managed a health insurance fund in the Brittany region; Europe affairs minister Marielle de Sarnez is accused of irregularities in her hiring of an assistant when she was a European Parliament deputy. Both deny wrongdoing, and in the case of de Sarnez the accusations look highly politically motivated. Yet mud sticks and a new poll shows most French want the pair to resign.

Economists polled by Reuters think the flash estimate of euro zone May inflation due out this morning will fall to 1.5 percent from a prior figure of 1.9 percent. If that proves accurate, it cannot but help boost expectations that the ECB’s Governing Council next week will drop from its statement a long-standing reference to the downside risks weighing on the region’s economy.

Sources with direct knowledge of the policy-makers' discussions say they will also discuss dropping some of their pledges to ramp up stimulus if needed - but there is still disagreement there on how gradually the ECB should change its stance.


Sterling has recovered somewhat from its overnight hit after a study by polling firm YouGov showed British Prime Minister Theresa May’s Conservatives may fall short of an overall majority in next week’s general election.

A Tuesday story on how various election outcomes might affect the pound quoted JPMorgan saying a hung parliament might ultimately boost the pound on the grounds such a result could make a softer Brexit more likely.

Sterling fell as low as $1.2788 on the poll then has crept back above $1.28, still down half a percent on the day. It’s also down 0.3 percent versus the euro.

European shares are expected to open slightly lower, with the exception of the UK’s FTSE 100, which may be helped by weaker sterling.

There is little major corporate news to focus on and with political worries back to the fore and the strong earnings season behind, investors are looking for fresh catalysts as a rally that brought the STOXX 600 index to 21-month highs has run out of steam.

The index however is up 0.8 percent so far this month, set to score its fourth straight month of gains.

Big movers are likely to be small and mid caps. In Switzerland, Meyer Burger Technology is seen up 2-4 percent after winning CHF 80 million of contracts in Asia. On the earning front, German retailer Metro reported a loss at its consumer electronics business as it invested heavily in IT, while its food business was helped by a stronger Russian rouble.

Also on the watchlist are Cellnex following a Bloomberg report that American Tower is exploring an acquisition of the Spanish towers; and Akzo Nobel after news that PPG was blocked by a Dutch regulators in its bid for more time to make an offer.

Other stock-moving headlines: Veneto bank investors face bail-in if no deal by end-June - EU source; Novartis warns of U.S. price pressure on Sandoz generics; ChemChina gets nearly 95 pct of Syngenta, seeks more; U.S. Fed fines Deutsche Bank $41 million for anti-money laundering failures; LafargeHolcim to launch Swiss share buyback on June 1; E.ON hires Goldman to explore options for Uniper stake -sources; Italgas pledges to raise dividend, invest 5 billion euros to 2023; Cevian Capital buys more than 5 percent of Sweden’s Ericsson; Daimler aims to expand supplier base in Alabama; Financial broker NEX’s CFO Bridges steps down.

MSCI’s main index of Asia-Pacific shares, excluding Japan, is up less than 0.2 percent while Tokyo stocks closed down 0.1 percent. Chinese stocks rose 0.3 percent after purchasing management data showed manufacturing activity in May kept pace with the previous month.

The dollar is up 0.1 percent against a basket of major currencies. The euro is down 0.1 percent at $1.1177 and the yen is down a similar amount at 110.95 per dollar.

Oil prices are down as Libyan and U.S. output seems to be outweighing the impact of cuts by OPEC and others. Brent is down 44 cents a barrel at $51.40. The forecast-beating China PMI helped lift copper, which was last up 0.2 percent at $5,670 a tonne.

Gold was down 0.1 percent at $1,261 an ounce and on track for its first monthly fall since December on expectations of a U.S. Federal Reserve interest rate rise.

The onshore yuan surged to the strongest level in more than fourth months, helped by the data but also on views that the central bank is now less inclined to allow the currency to depreciate markedly against the dollar and with policy makers changing how the calculate the yuan guidance rate for the second time this year.

Oil prices tumbling nearly 1 percent on fresh oversupply concerns weigh on Russia’s rouble, which weakens 0.3 percent against the dollar. Though South Africa’s rand and Turkey’s lira both strengthen around 0.3 percent, the latter hitting its strongest level in two weeks. All three currencies are on track for monthly gains.

Editing by Andrew Heavens

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