The pound has started the new week a little on the back foot as the markets await what could be a pivotal few days on the Brexit front, with these developments remaining the primary driver of the currency for the foreseeable future.
Helped in part by the dip in the pound the UK stock market has begun brightly, adding over 50 points to trade back near its highest level in 3 weeks.
Government set for another heavy Commons defeat
Parliament is scheduled to hold a second meaningful vote on PM May’s deal tomorrow, and while the margin of defeat is expected to be less than the record 230 seats seen in January, all suggestions point to another heavy loss.
A defeat would then trigger two further votes before Thursday, first, on whether MPs oppose a no-deal and then whether they would support an extension of Article 50.
If this all plays out as expected then it would pave the way for an extension of the current deadline beyond 29 March. This path has been seen as favourable for the pound ever since the currency rallied back in January when the PM lost the first meaningful vote, with the consensus view being that it supports a softer version of Brexit or perhaps even no Brexit at all (Due to time constraints a 2nd referendum would require an extension of Article 50).
However, there remains a nagging feeling that this line of thought is more than a little presumptuous, and it would not be entirely surprising if a different sequence of events played out. For instance, the PM’s position remains precarious to say the least, and should she be forced out of Number 10 and replaced by a more hardline Brexiteer, then the chances of a no-deal Brexit would rise significantly and could cause an angry reaction in the pound.
Boeing (NYSE:BA) shares slump in pre-market trade
When Wall Street opens an hour earlier than usual this afternoon, due to the end of US daylight savings time, shares in Boeing are called to begin sharply lower.
Airlines have grounded planes after Sunday’s fatal Ethiopian Airlines crash with China’s airline regulator suspending all Boeing 787 Max 8 domestic flights after one of the planes crashed shortly after take-off from Addis Ababa yesterday, killing all 149 passengers and the 8 crew members on board.
The tragic incident comes not long after the same model crashed shortly after taking off from Jakarta last October, killing 189 people, and has raised very serious concerns surrounding its safety. The expected decline in the stock can already be seen in Dow Jones Futures, with the index especially sensitive to any major moves in Boeing due to its large weighting on the benchmark.
At the last reshuffle, Boeing accounted for more than 11% of the index - almost twice as much as the next largest component - due to the weightings being calculated on a price-weighted basis. Therefore any large moves in the stock have a significant effect on the benchmark.