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Market Review 31-01

Market Review 31-01

Forex News

British Pound at Risk on EU, UK Brexit Deal – Stalemate

From: DailyFX.com

  • Pound at risk – outcome of Brexit remains unclear
  • EU Parliament debate shows Brussels is frustrated
  • Is a no deal Brexit becoming a greater possibility?

After two years, an exit plan for the UK from the EU is as unclear as when the negotiations began. On Tuesday, MPs voted on amendments to Theresa May’s “Plan B” after her initial proposal was shot down in what was the biggest political rejection in the UK Parliament’s history.

A detailed explanation of each amendment can be found here.

Many of the amendments did not pass, including one that would have allowed for a second referendum. However, one that did survive rejected the UK leaving the EU without a deal. However, this is not legally binding, which means a no-deal outcome is still possible.

The other amendment that passed stipulated that “alternative arrangements” would be made for the Irish backstop. This is an insurance policy to ensure that in the event of a no-deal Brexit, there would be no hard border between Northern Ireland (a member of the UK) and the Republic of Ireland (a member of the EU). Regular commuters would remain uninhibited, and goods would continue to cross the border.

After the debate in the House of Commons, the EU Parliament debated the recent amendments and proposals. However, notable EU officials have reiterated their position with clarity: a re-negotiation of the Brexit deal is not on the table, and the backstop policy will not be subject to change.

Some of these officials include EU Commission President Jean Claude-Junker, French President Emmanuel Macron, and President of the European Council Donald Tusk and EU Chief Negotiator for Brexit Michael Barnier. The latter said the backstop is “part and parcel” of the EU’s Brexit deal and will not be renegotiated.

While both sides have claimed they want to avoid a no-deal scenario, the divorce appears to be heading in that direction. The EU Parliament debated the issue, and the outcome appears to be a stalemate, with both sides digging their heels in and accusing the other’s rigidity for a no-deal outcome dangerously close to reality.

The EU Parliament debate displayed the MEP’s disdain and frustration with the UK’s apparent disorderliness. “The least we could do is respect the person who has the microphone…please listen, this is far too serious an issue to play out like in the [UK] parliament. This is not the House of Commons, this is the European Parliament” said the Deputy Speaker.

In his speech, Junker claimed that the lack of order in the UK legislature made negotiations difficult, and what Theresa May’s government wants is unclear. The issue is arguably straight-forward: a majority of Brexiteer MPs do not want the backstop, fearing that it may leave the UK indefinitely tied to the EU.

If the EU refuses to re-negotiate a new deal, and the UK will not budge on the backstop – the primary issue of the debate – makes a no-deal Brexit look increasingly more probable.

Read The Full Article Here

Yuan Rises After PMI Data; Fed Suggests Patient Approach to Rate Hikes

From: Investing.com

The Chinese yuan rose on Thursday in Asia as traders digested business survey data which improved slightly in January but still showed a manufacturing sector in contraction.

The USD/CNY pair fell 0.2% to 6.6971 by 12:22 AM ET (05:22 GMT).

The gain in the yuan came after the National Bureau of Statistics showed on Thursday that China’s January official Purchasing Managers’ Index (PMI) rose to 49.5 from 49.4 in December. The number was better than the 49.3 expected by analysts. However, it also suggested activity in China’s manufacturing sector has shrunk for the second straight month.

Meanwhile, the services PMI for January came in at 54.7, better than the 53.8 reported in the previous month.

Traders remained cautious as they await the outcome of the highly-anticipated trade talks between high-level Chinese and U.S. officials that began on Wednesday. The two sides are trying to reach a deal before a March 1 deadline that could usher in higher U.S. tariffs on Chinese goods.

The People’s Bank of China (PBOC) set the yuan reference rate at 6.7025 vs the previous day’s fix of 6.7343.

Meanwhile, the U.S. dollar index edged down 0.1% to 94.958 on Thursday after falling sharply against its rivals on the previous day as the Federal Reserve left interest rates unchanged and softened language about further rate hikes in its policy statement.

The central bank ditched its preference to continue with “gradual” rate hikes, saying it can hold off on monetary policy tightening following a slowdown in global growth and muted inflation pressures.

“In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes,” the Fed said.

Read The Full Article Here

 

Stock Market News

Unilever fourth-quarter sales miss expectations

From: Reuters.com

Unilever reported lower-than-expected fourth-quarter sales on Thursday, hurt by flat volume growth in developed markets.

In its first set of results under new chief executive Alan Jope, the maker of Dove soap and Ben & Jerry’s ice cream said fourth-quarter underlying sales rose 2.9 percent. Analysts, on average, were expecting 3.5 percent, a consensus forecast supplied by the company showed.

For the full year, Unilever reported turnover of 49.6 billion euros ($57.05 billion), excluding its divested spreads business, and earnings of 3.48 euros per share.

The Anglo-Dutch group, which is working to move past last year’s botched plan to move its main headquarters to the Netherlands, had said full-year sales growth would be at the bottom end of its 3 to 5 percent forecast range.

Looking ahead, it said it expects 2019 market conditions to remain challenging and forecast underlying sales growth again in the lower half of a 3 to 5 percent range, with continued improvement in underlying operating margin and another year of strong free cash flow.

It said it remained on track for its 2020 goals.

Read The Full Article Here

Shell’s 2018 profits soar to four-year high

From: Reuters.com

Royal Dutch Shell’s profits jumped by more than a third in 2018 to $21.4 billion, the highest since 2014, as the oil and gas producer vowed to stick to spending discipline.

The Anglo-Dutch company also reported a sharp rise in cash generation, in a further sign that cost savings since the 2014 downturn are filtering into its operations.

“We delivered on our promises for the year, including the completion of the $30 billion divestment program and starting up key growth projects while maintaining discipline on capital investment,” Chief Executive Officer Ben van Beurden said in a statement.

“We will continue with a strong delivery focus in 2019, with a disciplined approach to capital investment and growing both our cash flow and returns,” he added.

Shell’s 2018 profits rose 36 percent to $21.4 billion, beating the $20.98 billion in a company-provided forecast.

In the fourth quarter net income attributable to shareholders, based on a current cost of supplies (CCS) and excluding identified items, rose 32 percent to $5.69 billion as cost cuts filtered through.

That topped a company-provided forecast of $5.28 billion for the quarter.

Oil and gas production in the year rose slightly to 3.666 million barrels of oil equivalent per day as new fields that came online offset the effect of disposals.

Shell’s cash flow from operations in the fourth quarter rose to $22 billion, boosted by a $9 billion working capital movement, which brought the annual figure to $53 billion.

Free cash flow — cash available to pay for dividends and share buybacks — rose to $39.4 billion from $27.6 billion in 2017.

Read The Full Article Here

 

Cryptocurrency News

Top Russian Official Urges Parliament to Discuss Draft Crypto Bill Without Further Delays

From: Cointelegraph.com

The chairman of the upper house of Russian parliament has urged MPs to expedite their work on digital economy bills that include a draft on crypto regulation, local news agency TASS reports on Tuesday, Jan. 29.

Valentina Matvienko, who has headed the Federation Council since 2011, spoke to officials from several institutions, including the Upper House Committee for Economic Policy and Russia’s Ministry of Digital Development, Communications and Mass Media. She asked him to investigate the reasons behind the significant delay with the digital economy bills, TASS writes.

According to Matvienko, these bills have already spent a year in the Duma, the lower house of Russian parliament, without any significant changes. She urged MPs to find out what hinders their adoption, while also assuming that the legislation might be of poor quality and should be rewritten.

The official also noticed that Russia has all the necessary data for a digital breakthrough, but the delays with legal framework force startups to seek other jurisdictions.

Earlier this month, the chairman of the Russian Duma, Vyacheslav Volodin, announced that the bills on the digital economy — including the ones on digital financial assets, digital rights and crowdfunding — will be a priority during the upcoming parliamentary session. He also urged lawmakers to create a favorable legal environment for the development of the digital economy in Russia.

Later in January, the head of Committee on Financial Markets, Anatoly Aksakov, set a deadline for the discussion, stating that the parliament will review the crypto bill by the end of February.

As Cointelegraph previously reported, the Russian parliament passed the crypto bill in the first reading May 2018. However, after being edited, the final version received criticism from members of the crypto industry and later was sent back to the first reading stage.

Read The Full Article Here

 

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