Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Two issues are dominating investors’ minds today – the US-China trade war (again) and the Brexit crisis (ditto).
As things stand, America will impose new tariffs on Chinese imports on Sunday, further escalating the dispute with Beijing.
Overnight, Treasury secretary Stephen Mnuchin played down hopes of a breakthrough soon — telling reporters that he expects Chinese negotiators to visit Washington soon, but wouldn’t reveal when.
A notably uncommittal Mnuchin would only say:
“We continue to have conversations. We’re planning for them to come.”
White House trade adviser Peter Navarro also warned that a deal doesn’t appear close, telling Fox News that:
“I can tell you that it’s unlikely anything quick will happen given the structural basis of the problems.”
Such cautious talk undermines hopes that negotiations could resume, and make rapid progress, before the US levies higher tariffs on hundreds of billions of dollars of Chinese exports. The first tranche, on over $100bn of goods, will be imposed in just three days time:
Fears that the global economy is weakening are stalking the bond markets again today, with the yield on long-dated 30-year US debt at an all-time low.
After yesterday’s wobbles, the pound is stable this morning at around $1.22 to the US dollar, and €1.101 to the euro. But sterling is still vulnerable, as the anger over the decision to suspend parliament for five weeks reverberates around Westminster, and beyond.
Markets were caught off guard by the government’s sudden move to ask the Queen to prorogue parliament, triggering a burst of selling yesterday:
City economists say that a no-deal Brexit is looking more likely, as Boris Johnson tries to limit MPs ability to block the UK crashing out of the EU.
Oliver Blackbourn of asset managers Janus Henderson Investors warned clients to expect more turmoil in the next few weeks:
The PM’s move is likely to precipitate a no-confidence vote in his government as soon as parliament returns after its summer break at the start of September.
The challenge for those opposed to the government’s actions lies in their ability to effectively organise the apparent majority against “no deal” within the time constraints now in place. They must either bring legislation to prevent this type of Brexit or find a unity candidate to lead a new administration within the coming days.
Expect to see arcane parliamentary procedures used by both sides towards either outcome. Summer holidays are definitely over for MPs, now comes the shouting.
Our Politics Live blog is covering all the action:
Also coming up:
We get a major healthcheck on Europe’s economy today, with eurozone confidence reports, German jobless figures and updated French growth data.
Fresh US trade data could also be interesting, in the light of the trade war.
- 7.45am BST: Second estimate of French GDP for Q2 2019
- 8.55am BST: German unemployment figures for August
- 10am BST: Eurozone business and consumer confidence surveys
- 1.30pm BST: Second estimate of US GDP for Q2 2019
- 1.30pm BST: US trade balance for July