LONDON (Reuters) - European Commission President Jean-Claude Juncker will use his 0700 GMT "state of union" speech this morning - a much-hyped annual event styled on that of the U.S. president - to set out his vision of the European Union after Brexit.
The essential message, much more upbeat than in recent years, will be that the region should capitalise on a strengthening economy and recent poll defeats for anti-EU populists to forge ever closer unity. Abroad, he is likely to urge the bloc to push ahead with free trade deals from Japan to South America just as Donald Trump’s America takes a more isolationist turn. Brexit probably won’t get much of a look-in - a deliberate signal to London that it is not one of Europe’s top priorities right now.
Surprisingly high UK inflation data this week coupled with growing dissatisfaction at wage levels highlight British PM Theresa May's predicament. Even her government's move yesterday to lift a pay cap on some public sector workers was dismissed as insufficient given that the wage rises on offer aren't keeping up with consumer price hikes forced by the drop in sterling.
Jobs data due today are likely to show a lag yet again in overall UK wages. Normally in cases of above-target inflation, the Bank of England should be thinking about hiking interest rates - but its policymakers meeting tomorrow are loath to do that for fear of making a fragile economy even weaker.
With public sector strikes being threatened, the government could use a budget in several weeks' time to finance more generous pay rises across the board - but that would knock its borrowing plans off target unless it made cuts elsewhere. Is this shaping up to be May's winter of discontent?
After Tuesday’s records, global markets appear to be taking a breather. Apple’s launch of its latest iPhone underwhelmed many, with the Nov 3 release date later than some investors had expected while others fretted about the high price tag for its 10th anniversary model. The company’s stock price ended 0.4 percent in the red. Yet rising financial stocks, partly on a rebound in U.S. Treasury yields, helped offset that for the broader Wall St indices and all three set new highs.
Apart from the Apple-related 0.7 percent drop in Taiwan stocks, Asia stocks were more mixed. This week’s recovery in dollar/yen, which held above 110/$ early on Wednesday, helped Japan’s Nikkei stand out again with gains of almost 0.5 percent. European stocks are expected to edge lower at the open after two days of hefty gains.
Sterling’s surge was the eye-catching currency move on Tuesday as it jumped to its highest in a year against the dollar after news of an above-forecast 2.9 percent August UK inflation rate put traders on guard for more hawkish comments from the Bank of England meeting on Thursday.Sterling’s gains were across the board and its trade-weighted index staged its biggest one-day rise since June.
With UK jobless and earnings data out later, investors are watching UK wage rounds closely as the UK government lifts its public sector wage cap and labour unions warn of a wave of strikes over pay. Both UK and German governments auction 10-year bonds on Wednesday.
Elsewhere, Brent crude oil prices stayed firm above $54. And after a stellar summer, bitcoin’s slow retreat continued. It skidded up to 5 percent to briefly dip below $4,000 overnight after JPMorgan Chase chief executive Jamie Dimon said the crypto-currency "is a fraud" and will blow up.
editing by John Stonestreet