On 12 March 2019 - Global stocks mixed as UK parliament rejects revised Brexit deal

Anne D Picker

Anne D Picker - Econoday

Legislators were unhappy that the deal would prevent the UK from being tied to the EU customs union due to arrangements covering its land border with Ireland.

US markets

US stocks were mixed Tuesday, with the UK parliament’s decision to reject the government’s revised Brexit deal shortly before the close of trading in New York having little immediate impact. The Dow fell 0.4 percent on the day, the S&P rose 0.3 percent on the day, and the Nasdaq gained 0.4 percent.

Boeing fell further Tuesday after authorities in several countries grounded the 737 MAX class of planes in response to the second crash involving one of these planes in less than five months that occurred on the weekend. The European Union Aviation Safety Agency is among those authorities to have grounded the class of planes. The US Federal Aviation Administration, however, has declared that it still considers these planes to be airworthy and Boeing has announced that it sees no reason to provide new guidance to operators. US airlines have also expressed confidence in the planes of this class in their fleets.

Inflation data showed price pressures were subdued in February, likely reinforcing the view of Federal Reserve officials that they can be patient before adjusting policy settings any further. Headline CPI rose 0.2 percent in February, up from no change in January and in line with the consensus forecast, while the year-on-year change eased from 1.6 percent to 1.5 percent. Core CPI rose 0.1 percent, down from 0.2 percent previously and just below the consensus forecast of 0.2 percent, with its year-on-year change also moderating from 2.2 percent to 2.1 percent, just above the Fed’s 2.0 percent target level. Other data released Tuesday showed a smaller-than-expected rebound in a measure of small business confidence in February after a sharp fall in January and slightly stronger but still subdued growth in the Redbook survey’s measure of retail sales in the March 9 week.

These data reflect observations at 4:00 PM US ET. Gold rose US$11.00 to US$1,302.10 while dated Brent spot crude gained US$0.11 to US$66.69. The US dollar made a solid gain against the pound and a small increase against the yen but was moderately weaker against other major currencies. The yield on the US Treasury 30 year bond fell 4 basis points to 2.99 percent while the 10 year note fell 4 basis point to 2.60 percent.

European markets

European markets were little changed Tuesday, closing ahead of the Brexit vote in the UK parliament. The FTSE rose 0.3 percent on the day, the CAC advanced 0.1 percent, and the DAX fell 0.2 percent. Underperformance in German shares partly reflected a fall in Volkswagen after the automaker reported a fall in operating margins for its VW brand and announced expanded plans to introduce more electric models. 

The pound traded in a wide range before and after the Brexit vote late Tuesday. Parliament voted to reject the government’s revised Brexit deal 392 votes to 242 votes, with many legislators unsatisfied that the deal would prevent the UK from being tied to the EU customs union because of arrangements covering its land border with the Republic of Ireland. A vote on whether the UK should withdraw with no deal in place is scheduled to be held Wednesday. If this vote also fails, as it is expected to, parliament will vote on Thursday on whether to seek to delay withdrawal. If this vote is rejected, Brexit will likely proceed as scheduled with no deal in place, while if passed the UK government will then seek the European Union's approval to delay withdrawal.

UK industrial production data showed a solid rebound in January, up 0.6 percent on the month after falling 0.5 percent in December, with year-on-year growth unchanged at a decline of 0.9 percent. Manufacturing output rose 0.8 percent on the month after falling 0.7 percent previously, reflecting rises in eight of the thirteen subsectors including a 5.7 percent increase in the production of pharmaceuticals. Output changes in other sectors were mixed. Monthly GDP data showed a similar pattern in the services sector and aggregate production, with the 0.4 percent decline in the latter recorded in December followed by a 0.5 percent increase in January.

UK trade data showed the merchandise trade deficit widened from a revised £12.67 billion in December to £13.08 billion in January. Exports increased 4.1 percent on the month after falling in each of the two previous months, but this was offset by an increase of 3.8 percent in imports.  

Asia Pacific Markets

Most Asian markets recorded solid gains Tuesday. The Shanghai Composite index rose 1.1 percent, the Nikkei and Topix gained 1.8 percent and 1.5 percent respectively, and Hong Kong’s Hang Seng index and Korea’s Kospi index both advanced 1.5 percent. Australia’s All Ordinaries index underperformed, unchanged on the day after weak housing market data.

Indian data showed some stabilization in inflation but weaker activity at the start of the year. Headline consumer price inflation picked up from 2.05 percent in January, its lowest level since mid-2017, to 2.57 percent in February. This is the first increase in headline inflation after four consecutive declines but leaves it close to the bottom of the Reserve Bank of India's target range of 2.0 percent to 6.0 percent. Industrial production increased 1.7 percent on the year in January, slowing from 2.4 percent in December, mainly reflecting slower growth in the manufacturing sector. RBI officials have shifted their focus from curbing inflation to boosting growth in recent months, cutting policy rates at their last meeting in early February. With growth slowing and inflation still low, these data releases suggest that another rate cut will be considered at the RBI’s next policy meeting early April.

Australian data published Tuesday showed both the volume and value of loans made to purchase residential property fell further in January. Demand for new loans remains impacted by ongoing property price declines, while tighter regulations have restricted supply. 

Looking forward

Japanese household spending and producer price data will be published shortly, followed by Eurozone industrial production and Italian unemployment data. Having rejected the government’s Brexit deal Tuesday, he UK parliament is scheduled to vote Wednesday on whether to withdraw from the EU with no deal in place. Durable goods orders will be the main focus of the US data calendar Wednesday. 

Global Stock Markets

 

Index

Mar 12 2019

Daily Change

% Change Daily

North America

United States

Dow

25554.66

-96.22

-0.4

 

NASDAQ

7591.03

32.97

0.4

 

S&P 500

2791.52

8.22

0.3

Canada

S&P/TSX Comp

16136.66

30.42

0.2

Europe

UK

FTSE 100

7151.15

20.53

0.3

France

CAC

5270.25

4.29

0.1

Germany

XETRA DAX

11524.17

-19.31

-0.2

Italy

MIB

20631.19

-7.03

0.0

Spain

Ibex 35

9161.70

-10.20

-0.1

Sweden

OMX Stockholm 30

1565.56

-4.37

-0.3

Switzerland

SMI

9331.62

-9.73

-0.1

Asia/Pacific

Australia

All Ordinaries

6260.57

-2.71

0.0

Japan

Nikkei 225

21503.69

378.60

1.8

 

Topix

1605.48

24.04

1.5

Hong Kong

Hang Seng

28920.87

417.57

1.5

S. Korea

Kospi

2157.18

19.08

0.9

Singapore

STI

3212.25

20.83

0.7

China

Shanghai Comp

3060.31

33.32

1.1

Taiwan

TAIEX

10343.33

93.05

0.9

India

Sensex 30

37535.66

481.56

1.3

*Markets closed
Source: Haver Analytics

Note: all releases are listed in local time.

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