There’s a growing sense of expectation amongst market participants and political observers that the formal process for the UK to leave the EU is set to begin this week, with some expecting Article 50 to be triggered as soon as Tuesday. The pound is rising against the majority of its peers this morning whilst the FTSE is little changed.
MPs to vote on amendments
Later today, the House of Commons is expected to reject the two changes made to the Brexit bill in the House of Lords. Should this occur, the bill will then pass back to the upper house of government to see if Peers will accept the rejection or continue the ping-pong process. Parliament could sit through the night to try and reach an agreement with time also being allocated in the coming days should the process be frustrated. Once both houses are in agreement as to the text within, the EU withdrawal bill could then complete its final stages and go for Royal Assent after which the government can trigger Article 50. Feasibly this could happen by the end of play tomorrow, however it seems more likely that Wednesday or Thursday will see the UK provide the formal notification of their intention to withdraw from the EU. Since the start of the year the pound has reacted positively to any progress made along the Brexit path and the currency could see further gains ahead once Article 50 is triggered.
Commodity stocks rise on pullback in the buck
The best performing stocks on the leading UK stock index this morning come form the mining sector with Fresnillo (LON:FRES), Anglo American (LON:AAL) and Rio Tinto (LON:RIO) all rising by more than 3% since last week’s close. Since a strong US jobs report on Friday the market is now seemingly discounting a Fed rate hike this week as a given and paying more attention to the probability of future increases which remain far less certain. This uncertainty can be seen in the US dollar and gold in dollar terms with the former declining and the latter gaining. Together this has provided the boost seen for the majority of commodity stocks although it has done little for Oil majors, with BP (LON:BP) and Royal Dutch Shell (LON:RDSa) moving lower after last week saw the oil price suffer its largest decline since November. Rising US inventories provided the catalyst for the drop, although the market reaction to a ninth successive increase in the DOE stockpiles was sharp enough to suggest that it could have been the straw the broke the back of oil bulls clinging to hopes that output deals would finally end the global supply glut.