Article 50 extension focuses minds
Fiona Cincotta March 20, 2019 12:00 PM
The big political story of the day is Prime Minister Theresa May’s decision to seek an extension to the Brexit deadline, previously scheduled for 29 March, despite opposition from within her cabinet.
The big political story of the day is Prime Minister Theresa May’s decision to seek an extension to the Brexit deadline, previously scheduled for 29 March, despite opposition from within her cabinet. This followed the controversial ruling by House of Commons speaker John Bercow that it would be unconstitutional for the government to submit the proposed deal with the European Union to the Commons unless it was substantially different.
Despite some discussion about whether closing and reopening Parliament formally might provide a way around the problem, May is obviously keen not to try to shunt through her deal under circumstances that would be questionably legal and thus leave it open to future challenge. May is understood to be writing to the EU Council today to request a short extension of the Article 50 deadline, potentially to the end of June, but there is no guarantee that the EU will agree. The pound was trading down early this morning but still above the significant 1.32 level vs USD as UK economic news remains positive.
China trade talks – optimism creeping in on Beijing visit
In Asia concerns continue to swirl around the ongoing drama of the US-China trade talks. This seems to be front and centre of most Asian investors’ minds, along with the prospects for the Chinese economy. Asian markets came off their highs overnight, and China worries seem to have weighed on mining stocks. The Shanghai Composite had a bad morning but was able to claw back most of its losses in the afternoon to finish the day almost flat as news emerged that two senior US trade negotiators – US Trade Representative Robert Lighthizer and Treasury Secretary Steve Mnuchin - will visit Beijing next week.
Fed meeting not expected to deliver any surprises
This evening we have a meeting of the US Federal Reserve, which is going to be watched very carefully. The S&P 500 was flat overnight following a long bull run in the US equities space and as investors wait for the Fed meeting today. Minutes from the Fed’s January meeting revealed that several members of the Federal Reserve’s Open Market Committee are still considering a couple of rate rises this year to be appropriate, particularly if the US economy performs as expected. The USD has been down seven out of eight sessions ahead of today's Fed meeting.
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