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MP's Vote To Extend Article 50 As The Brexit Saga Continues - EMEA Brief 15 March

Guest IGAaronC


  • Theresa May has scheduled another vote on her Brexit deal following the latest round of voting on the house of commons as MP’s voted last night to extend article 50. It still remains to be seen whether this extension will be agreed to by the EU.
  • The US senate has voted to prevent funding for Trump’s border wall, the main sticking point of the government shutdown at the beginning of the year, potentially setting up a veto from the president.
  • The FTSE was up 0.5% yesterday but most of that came at the market open following Wednesdays vote that a no-deal situation wouldn’t be accepted.
  • Asian markets traded higher yesterday with the Hang Seng gaining 0.83% and the Nikkei up 0.77%. Reports of an official visit from the Chinese president were linked to potential trade talks which gave markets some buoyancy.
  • Tesla have announced a new vehicle, the Model Y, an SUV with a forecasted starting price of $47,000
  •  Brent and US crude were up 0.27% and 0.31% respectively as OPEC pushed for supply cuts yesterday
  • Gold lost over 1% yesterday as the dollar strengthened on the possibility of trade war progress between the US and China

Asian overnight: Asian market traded in the green overnight, with the Australian ASX 200 once again providing the outlier to the overall market direction. Trade talk concerns have reared their head this week, with the meeting between Xi Jinping and Donald Trump being pushed back to April at the earliest. However, we have since seen the Chinese media reporting on substantive progress, with Beijing passing a new law that allows greater foreign investment into the country. The session also saw the release of foreign direct investment data, with the growth rate rising to 5.5%. Elsewhere, we saw the BoJ rate decision, with the bank maintaining rates as expected, yet offered a bleaker assessment of trade for the Asian powerhouse.

UK, US and Europe: Today sees a likely calm end to a hectic week, with the third and final Brexit vote taking place yesterday that ended in a request to the EU for an extension to article 50. The final eurozone CPI figures are released this morning, while a number of tier two figures such as the Empire state manufacturing survey, industrial production, and Michigan consumer sentiment are released in the US. However, markets will instead be looking for drivers from the US and UK in the form of shifting sentiment around Brexit and trade talks.

Economic calendar - key events and forecast (times in GMT)

Ecomomic Calendar 15.3.19.PNG

Source: Daily FX Economic Calendar

10am – eurozone CPI (February): expected to 0.3% MoM and 1.5% YoY, and core CPI to be 1%, down from 1.1% YoY. Market to watch: EUR crosses
2pm – US Michigan consumer sentiment (March): confidence index to fall to 93 from 93.8. Market to watch: USD crosses

Corporate News, Upgrades and Downgrades

  • Restaurant Group saw a 51% fall in annual pre-tax profit for 2018, to £13.9 million, though revenue was up 1% at £686 million. Like-for-like sales were down 2%.
  • JD Wetherspoon said that first-half profits fell 18.9% to £50.3 million, while revenue rose 7.1% to £889.6 million, while like-for-like sales rose 6.3%. Higher wages hurt profits, and labour costs are expected to rise in the second half of the year.
  • Berkeley Group has restated its guidance for full-year pre-tax profit to grow 8% as weaker demand in London and the south-east hits performance.

Cerved upgraded to buy at HSBC
Dufry upgraded to buy at Baader Helvea
GEA Group upgraded to overweight at Barclays
Galenica upgraded to buy at Kepler Cheuvreux

Britvic downgraded to neutral at Citi
Cairn Energy downgraded to sector perform at RBC
Leroy downgraded to sell at DNB Markets
Wirecard downgraded to sell at Citi

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