November 8, 2017 / 8:34 AM / a year ago

Daily Briefing: New cabinet trouble for May

LONDON (Reuters) - Is Britain’s Theresa May about to lose another minister from her crisis-hit cabinet?

FILE PHOTO: Britain's Prime Minister Theresa May in 10 Downing Street

Despite an apology and a rather convoluted account of her behaviour, Development Minister Priti Patel is under pressure to go after media reports overnight about new unauthorised meetings with Israeli officials which she had failed to properly disclose. Some are already drawing comparisons with the 2011 resignation of then Defence Secretary Liam Fox over revelations of his contacts with a lobbyist on foreign trips.

The fact that Patel, who is popular among Brexiteers in the ruling Conservative Party, is still clinging onto office at all is being widely interpreted as a sign of May's lack of authority - as is Boris Johnson's continued occupancy of the foreign secretary post despite his latest gaffe over Iran.

Catalonia's pro-secessionist parties failed by yesterday's midnight to agree on a joint ticket for the Dec 21 regional election. That is good news back in Madrid for PM Mariano Rajoy, as a joint campaign would have been a very potent signal of their resolve to push the case for independence.

What’s more, it raises new questions about the leadership-in-exile of Carles Puigdemont, with others now vying to take the helm of the movement. In the meantime, Catalan civic groups have called for a general strike today across the region to protest the imprisonment of pro-independence officials being held on remand ahead of trial for sedition.

There are tangible signs of progress in efforts to form a new German government. Party chiefs now hope to agree outlines of a coalition deal by the end of the week after the liberal FDP gave ground on the massive tax cuts it had wanted, and the Greens said they would no longer insist on deadlines to shut down coal-fired power stations and to ban cars with internal combustion engines.

There will still be weeks of arguing over the nitty-gritty of any final pact but Angela Merkel and her CDU look to be making headway towards forming a new government. She may well use an event this evening to give further comment.


World markets were a bit flatter overnight, both in terms of equity indices and bond yield curves, as oil retreated from this week’s Saudi-related highs and China’s above-forecast October imports were offset by a more disappointing export reading.

U.S. President Donald Trump’s visit to Beijing on Wednesday may keep attention on China and North Korea later in the session. The S&P500 hiccupped last night, meantime, ending in red as volatility ticked up and traders eyed reports that Senate Republicans were angling for a delay in implementing any tax cut legislation.

Financial stocks also suffered as the 2-10 year U.S. Treasury yield curve flattened to its lowest in 10 years ahead of next month’s largely priced-in U.S. interest rate rise.  

That said, the ‘spike’ in the Vix overnight didn’t even manage a close above 10 percent, Asia bourses outside Japan eked out another 10-year high early Tuesday and the MSCI World index is on course for its 10th straight day of gains – the longest winning streak since July. One more day of gains on Thursday would make it the longest run since the winter of 2003/2004.

Most Asia bourses were little changed in reality, much like Wall St, and major currencies were pretty flat too.

European stocks are expected to meander at the open too, with eyes there still on the heavy earnings season. Brisk mergers and acquisitions activity has helped buoy world stocks this week too.

Slideshow (6 Images)

Brent crude oil slipped further to $63.40, meantime, as markets watched how Saudi events pan out and how intra-OPEC relations may be affected.

Saudi Arabia's stock market fell another 1 percent in early trade on Wednesday because of concern about the economic impact of its anti-corruption purge, but other bourses in the region began to stabilise. Kingdom Holding, the investment vehicle of Prince Alwaleed bin Talal, steadied after losing more than 20 percent over the previous three days. The stock is now estimated to be close to or below its book value.

Sterling was slightly weaker in early trade too, with Bank of England monetary policymakers due to speak later on Wednesday after last week’s first BoE rate hike in a decade. Markets were also eyeing instability within UK PM May’s government and expectations of further resignations from her cabinet.

Editing by Matthew Mpoke Bigg

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