European cash equity markets are posting small gains ahead of the midway stage having pulled back from earlier highs (FTSE +0.4%, DAX +0.2%, CAC +0.2%). Basic resources jumped at the open, boosted by renewed optimism surrounding US-China trade negotiations after conciliatory remarks from US President Trump on Friday. Auto stocks have lagged meanwhile, led lower by Renault shares which slumped on reports their CEO has been arrested in Japan for financial violations. In fixed, German government bonds have edged lower while Gilts trade closer to the flat line amid ongoing Brexit related uncertainty. Latest reports have suggested that forty-two lawmakers have submitted no-confidence letters which would mean only six more are required to prompt a leadership contest. Turning to currencies, Sterling has welcomed the fact that the aforementioned threshold has been reached and is battling with the Swiss Franc for the G10 top spot while the Antipodeans are the weakest. On the data front, the Euro Zone current account surplus narrowed to €16.9 Bln (f/c. €24.2 Bln) from €24.3 Bln while construction output surpassed expectations at +2.0% MoM (f/c. -0.5%). Elsewhere, oil prices are ahead with US crude futures up around +0.5% while spot gold has lost -0.1%. Looking ahead, futures are pointing to a relatively flat open on Wall Street ahead of the NAHB housing market index plus possible comments from New York Fed President Williams.
Key Headlines/Data:
* European Corporate News:
– Renault (-11.3%): CEO Ghosn has been arrested in Japan for financial violations
– Novo Nordisk (+2.8%): JPMorgan upgraded to ‘overweight’
– Telecom Italia (+3.5%): Announced Luigi Gubitosi as their new CEO
– Danske Bank (+0.3%): Whistleblower Wilkinson said his warnings were not taken seriously by management.
* Brexiteers scrambling to find 6 more MPs to trigger no-confidence vote in Theresa May (The Sun):
– BREXITEERS were last night scrambling to find at least six more MPs to take them over a threshold to trigger a no confidence vote in Theresa May.
– An extensive investigation by The Sun revealed that a total of 42 Tory MPs had given firm assurances that they had submitted letters saying they no longer support the PM
* ECB’s Villeroy said net asset purchases would probably end in December but this would not mean the end of monetary stimulus.
* Russian Energy Minister Novak said he plans to sign a partnership with OPEC and it would be discussed at their December meeting.
* UK Business Minister Clark said a longer transition period could be implemented if requested, adding that an extension until 2022 is an option.
* Euro Zone Current Account (Sep) €16.9 Bln versus €24.2 Bln expected, previous €23.9 Bln revised to €24.3 Bln
* Italian Deputy PM Di Maio said he has no worries regarding the potential EU process.
* Former UK Brexit Minister Davis said he does not expect a leadership contest.
* ECB Supervisory head Nouy said the results of the stress tests show there is no need for recapitalisation.
* UK Northern Ireland Minister said there is not going to be a different deal, adding that they will leave without a deal if it is rejected.
* Euro Zone Construction Output Data (Sep):
– Construction Output M/M +2.0% versus -0.5% expected, previous -0.6%
– Construction Output Y/Y +4.6% versus +2.5% expected, previous -2.2%
* EU Brexit Minister Barnier said a possible transition extension would involve talks on a UK financial contribution.
* Bundesbank: The German economy will probably expand quite strongly again towards the end of the year
* @MattChorley (Editor – The Times)- LETTERS So where are we on letters? Of the 48 needed to trigger a vote of no confidence, 25 have gone public so far.. Senior Brexiteers tell The Times they have “firm pledges” from 50+ MPs to submit letters by this evening, with a vote triggered within two days.
