European markets are mixed this morning with the FTSE just above the flat line and the DAX in negative territory only a day after it bounced back to catch up with global markets. In London, miners and industrials were among the top gainers, benefiting from a slightly weaker pound and marginally cheaper oil prices.
Sterling unstable ahead of indicative votes
The pound has been declining since late Tuesday despite some brief positive interludes, reacting to the re-positioning in Parliament ahead of the indicative Brexit vote Wednesday that will for the first time put multiple Brexit options in front of Parliamentarians to see which one gathers the most support.
The decision to open the vote to any option has spooked several hard-line Brexiteers causing them to line up behind the Prime Minister rather than risk a long Brexit delay. However, though avoiding a swift but hard Brexit is good news for the pound, going into a protracted period of uncertainty would continue to damage domestic industries and the currency.
The day promises more volatility as Theresa May is scheduled to meet Tory backbenchers in an attempt to gather support for a third attempt at voting for her proposal.
Asian markets shrug off Chinese data
Asian shares managed to nudge higher despite data showing a sharp decline in earnings at China’s large industrial firms as investors pinned their hopes that the country’s government will react to the decline by pumping more money into the industry to prop it up.
Whether those hopes are misguided or not remains to be seen but the fact remains that the 14% decline in China’s industrial profit comes on top of the already weaker figures for manufacturing and exports in January and February, rounding up a picture of a weakening industrial sector. The car sector was particularly badly hit as were oil refining, chemicals and steel production, all of which are key for China’s economic growth.
On the other hand, the data channelled fresh buying into the dollar as a risk averse buy, as did a series of other weaker economic data released Tuesday.
US housing numbers fell short of expectations showing the biggest decline in eight months while US consumer confidence indicated a more pessimistic consumer view on future prospects. Both figures will add to concerns over the state of the US economy and keep a cap on stock market gains.
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