July 4, 2018 / 7:57 AM / 4 months ago

Daily Briefing: On the wrong side of the law - Polish judges

LONDON (Reuters) - Polish judge Malgorzata Gersdorf walked into Warsaw's Supreme Court building in Warsaw this morning in complete defiance of government-backed legislation putting her and other judges into an enforced retirement.

Supreme Court President Malgorzata Gersdorf walks to the Supreme Court building, next to supporters, in Warsaw, July 4, 2018
My presence here is not about politics, I am here to protect the rule of law

Protesters angry at what they see as the ruling Law and Justice Party’s attempt to gain political control of the judiciary are out in force to support Gersdorf; so far there has been no attempt by authorities to physically remove her from the building. With the EU deeply concerned about an erosion of the rule of law in Poland, this showdown is being watched closely in capitals around Europe.

Now Angela Merkel's Social Democrat allies are umming-and-ahhing about whether they can back her deal with the Bavarian CSU on transit centres for migrants. They say the pact, which still leaves unclear how it will be implemented in practice, needs to be converted into a set of "reasonable rules".

There will be further talks tomorrow but for now the SPD is not going all-out against the arrangements. Merkel this evening will give an extensive interview to the ARD public broadcaster.

Police in Britain have declared a major incident after it said a man and a woman found in a critical condition may have been exposed to an unknown substance near the southern English town of Salisbury. That is where Russian former spy Sergei Skripal and his daughter Yulia, fell severely ill in March after being poisoned by nerve agent - although so far no link has been made publicly with that case.

MARKETS AT 0655 GMT

The Fourth of July holiday stateside hasn’t stopped the air coming out of global stock markets as trade war fears smoulder. A late reversal on Wall St overnight, led by tech stocks such as Facebook and a 7 percent drop in electric carmaker Tesla, saw the S&P500 end almost 0.5 percent down on the day and underlined the gloomy start to the second half of the year.

Other market bellwethers of economic growth also continued to flash amber, with the closely-watched 2-10 year Treasury yield curve closing within a whisker of 30 basis points, its lowest close in 11 years. Copper prices fell to 9 month lows.

With Chinese markets awaiting the imposition of 25 percent U.S. tariffs on some $34 billion of Chinese goods on Friday, Shanghai and HK stocks fell about 1 percent each overnight.

The Shanghai composite is now down almost 23 percent from January’s peaks. Beijing plans to reciprocate with Chinese tariffs on $34 billion of U.S. goods and these will take effect from midnight local time on Friday too, sources told Reuters.

Adding to the trade woes and tech wobble was news that a Chinese court has temporarily barred Idaho-based Micron Technology from selling 26 semiconductor products in the world's biggest memory chip market, citing violation of patents held by Taiwan's United Microelectronics Corp.

Meantime, European officials told Reuters that China is putting pressure on the European Union to issue a strong joint statement against President Trump's trade policies at a summit later this month, citing top level meetings in Brussels, Berlin and Beijing.

The yuan firmed for a second day, however, after Tuesday’s moves by the People’s Bank of China to insist it wanted a stable currency and sales of dollars by state-owned banks that many in the market say were directed by the authorities.

German Chancellor Angela Merkel and Interior Minister Horst Seehofer arrive before a budget debate at the lower house of parliament in Berlin, July 4, 2018

News that China’s services sector grew at the fastest pace in four months helped steady the currency. Elsewhere in Asia, benchmark equity indices in Tokyo, Seoul and other smaller regional markets were lower too. European stock futures were also in the red.

The dollar was lower as U.S. Treasury yields slipped, with euro/dollar slightly higher even though still below $1.17. Brent crude oil prices edged up to test levels above $78 on Wednesday after a report of tightening U.S. fuel inventories amid an outage at Syncrude Canada oil sands facility in Alberta, which usually supplies the United States. Prices have also been support by looming U.S. sanctions against Iran.

— 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 —

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