Brexit Bombshell, Another Brexit Vote Due Today, Futures Up But Fears LingerMay’s Brexit deal gets voted down again, now lawmakers must decide what to do next and that decision will move the market.
Asian Markets Fall After Brexit Bombshell Explodes
Asian markets fell on Wednesday after the latest Brexit bombshell exploded on the market. The word that Theresa May’s newly amended deal had been voted down rocked markets eager for good news. The latest version labeled the last chance by EU President Juncker was voted down 391 to 242 and triggered a series of important votes. The first vote is whether the UK should proceded with Brexit. The next is whether to ask for an extension or possibly withdraw Article 50.
May says “I continue to believe that by far the best outcome is that the U.K. leaves the EU in an orderly fashion with a deal and that the deal we have negotiated is the best and indeed the only deal available,”.
The Shenzen Composite led markets lower with a loss of -2.30%. The Shanghai Composite was the next biggest loser with a decline of -1.09%. The Japanese Nikkei fell -0.99% but others in the region where not hit as hard. The Korean Kospi and Hong Kong Hang Seng both fell about -0.40% while the Australian ASX fell only -0.22%. The ASX was supported by strength in energy which is in turn supported by OPEC’s decision to tighten the market.
Pound Mixed, Brexit Votes In Sharp Focus
The pound was mixed following the latest Brexit defeat. Sterling fell hard in the wake of the vote but has since found support and regained some of the losses while traders await the outcome of the next vote. Equity indices in the region were largely higher and led by the Frech CAC’s 0.40% midday advance.
The UK FTSE 100 was up about 0.30% in early trading while the German DAX was closer to break even. The energy group was among today’s leaders with an average gain of 0.50% across the sector. The autos were also trending higher with gains near 0.35%.
In economic news, EU industrial production was better than expected to alleviate some fear within the market. Industrial production rose 1.4% for the month, four tenths hotter than expected, and a sign of an economic rebound. The YOY comparison also stronger than expected at -1.1% versus -2.1% expected.
Futures Up But Fears Lingers, Inflation Data Tame
The U.S. futures were indicating a positive open in early premarket action but the gains were small. Fears are focused on the rapidly approaching Brexit deadline. The apparent inability of UK lawmakers to get the deal done has traders on edge. The NASDAQ was in the lead in early trading with a gain near 0.40% but closely followed the S&P 500 and Dow Jones Industrial Average with advances of 0.30% and 0.20%.
Shares of Boeing continue to drag on indices as the latest crash sparks caution among investors and aviation regulators. China, the UK, and the EU are among the growing list of countries that have grounded their Max 737 fleets pending the investigation. Shares of Boeing are down another -1.0% in the premarket.
On the economic front, U.S. producer prices rose less than expected over the past month. The PPI increased only 0.1% versus an expectation for 0.2% and has risen only 1.9% over the last year. Core PPI is still a little hot at 2.3% but trending near the FOMCs 2.0% target and not yet causing concern for consumer-level inflation.