LONDON (Reuters) - Elections to the new European Parliament in May are being viewed by politicians everywhere a chance to assert their vision of where the continent should head after Brexit.
After France's Emmanuel Macron yesterday laid out his proposals for the European Union to do more to "protect" its citizens, the region's conservatives are at last bringing to a head an internal row with Hungary's populist leader Viktor Orban.
They have warned him his Fidesz party faces expulsion unless he apologises for a poster campaign depicting European Commission chief Jean-Claude Juncker and U.S. billionaire George Soros as tacit supporters of mass immigration into the continent.
His party is saying they want to remain in the conservative grouping in the EU assembly but want to push it to back stronger anti-immigration policies; that could be a step too far for more centrist conservative politicians such as Germany’s Annegret Kramp-Karrenbauer, Angela Merkel’s anointed successor.
For now, no explicit apology seems to have been forthcoming from Orban: a final decision on whether to kick out Fidesz is due on March 20.
A Reuters poll suggests that economists are resigned to the fact that the candidate they consider to be best qualified to take over from Mario Draghi as ECB chief this year will not get the job given the political intricacies of the selection process and various legal hurdles.
They would like ECB board member Benoit Coeure, a key architect of its crisis-era quantitative easing scheme at the dovish end of the policy spectrum, to take over from Draghi when his term ends at the end of October.
However former Finnish central bank chief Erkki Liikanen is regarded as the most likely winner of what will be a political compromise for a more neutral candidate among the euro zone’s biggest powers.
British Prime Minister Theresa May will today offer parliament a greater say over changes to workers' rights laws after Brexit, seeking to win the support of wavering lawmakers as she prepares to put her EU exit deal to the test next week.
May will announce plans to write her promise of improved consultation over post-Brexit workers’ rights into legislation and offer lawmakers, businesses and trade unions a say on whether Britain should match any future EU law on the issue. Business has welcomed the move but trade unions are sceptical, saying the promise could easily be broken by a future government.
MARKETS AT 0755 GMT
Shanghai stocks are the standout performer of the week, adding another 1.6 percent on Tuesday to nine-month highs on the back of Chinese tax cuts and spending stimulus plans, hopes of an imminent Sino-U.S. trade deal and basking in last week’s MSCI announcement of a quadrupling of mainland shares in its international benchmarks this year.
The Shanghai composite is now up 24 percent so far this year. Underlining the exceptional gains there is the fact that most of the rest of regional and global stock markets have run into the sand, stalling this week and ticking back lower if anything.
Seoul and Tokyo benchmarks ended lower, with the former hit by reports that North Korea has restored part of a missile launch site dismantled last year following last week’s failed summit in Hanoi, and after U.S. national security adviser Bolton said Washington was prepared to ramp up sanctions unless Pyongyang’s nuclear programme was ended.
Disappointing Australian fourth quarter GDP data boosted speculation of an easing of monetary policy there, knocking the Aussie dollar to two-month lows but lifting local shares 0.8 percent.
The wider global picture was muddier. Wall St’s S&P500 ended in the red overnight and U.S. and European stock futures were flat to lower first thing Tuesday. A warning from General Electric about net cash outflows from its industrial businesses this year offset upbeat earnings reports from top retailers.
There was some trepidation about what many reports say is the imminent release of U.S. special counsel Mueller’s report into the possible Russian meddling into the 2016 U.S. elections and alleged links with the Trump campaign. The macroeconomic news was brighter, with service sector business readings from the U.S. and Europe beating forecasts and countering the still-subdued manufacturing picture.
Eyes will be on the OECD’s latest global economic forecasts later today. The upbeat service sector readings in Europe, which dragged Italian government bond yields lower on Tuesday, also complicate the picture somewhat ahead of tomorrow’s European Central Bank meeting.
Markets are now braced for an announcement of a new round of targeted cheap lending via so-called TLTROs, but longer-term interest rate guidance is less clear and at least some policymakers think data points such as the service sector readings are reasons not to abandon or push back existing policy ‘normalisation’ plans just yet. Euro/dollar was lower again first thing Wednesday, testing $1.13 before steadying.
The dollar’s DXY index nudged higher for the sixth straight day even with 10-year Treasury yields a fraction lower. U.S. private sector jobs numbers for February are due for release later, with the overall monthly payrolls report due Friday.
Sterling was lower against the dollar and euro, with Brexit nerves stepped up again as traders await a readout from meetings between UK attorney general Cox and EU negotiator Barnier with little sign of a breakthrough so far on words to assuage UK lawmakers over post-Brexit provisions for the Irish border.
Economic and corporate soundings over the threats of a ‘no deal’ continue to ratchet higher in the meantime, although Bank of England governor Carney said on Tuesday the market may be underestimating the central bank’s resolve to keep inflation in check by tightening monetary policy again even after Brexit.
Canada’s dollar touched a two-month low ahead of the Bank of Canada’s policy decision there today - with speculation it will follow the Fed and turn dovish too. Turkey’s lira was a shade softer ahead of a central bank policy decision there today, with lower-than-expected inflation readings encouraging some to bet on the outside chance of a rate cut.
— 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 —