Morning Market Essentials
Brexit negotiations get off to a rocky start, oil holds over $50 as OPEC cuts outweigh U.S. supply, and the risk is back in emerging markets.
The stretched twig of peace
In what is probably not an ideal start to the two-year Brexit negotiation process, a spat over the status of Gibraltar escalated to the point where a senior member of Theresa May's governing party suggested the prime minister would go to war to protect the south Iberian rock. Spanish Foreign Minister Alfonso Dastis attempted to calm the situation, saying that "it looks like someone in the U.K. is losing their composure." On the data front, U.K. manufacturing PMI showed a decline to 54.2 in March as inflationary pressures continue. The pound dropped following the release.
EM risks
Unrest in emerging markets is on the rise. In Latin America, there are anti-government protests in Paraguay (where the congress building was set ablaze on Friday), Ecuador and Brazil. Venezuela's top court reversed its decision to strip power from the opposition-led National Assembly, taking the country back from the brink of dictatorship. In South Africa, the political fallout from President Jacob Zuma's decision to fire his finance minister continues with parliamentary Speaker Baleka Mbete saying she is considering whether to allow a vote of no-confidence in the president to be held. Despite all this, investors are not yet running for the exits.
Oil back over $50
A barrel of West Texas Intermediate for May delivery was at $50.68 by 5:37 a.m.Eastern Time as optimism over production cuts outweighed rising U.S. supply. OPEC's Secretary-General Mohammad Barkindo said the group's output reduction is helping to bring the market to balance. Tensions in the oil-producing Kirkuk region of Iraq risk curtailing supply from the 1-million barrels a day field.
Markets quiet
Overnight, the MSCI Asia Pacific Index added 0.4 percent, while Japan's Topix index closed 0.3 percent higher as regional PMI data were strong. In Europe, the Stoxx 600 Index was 0.2 percent higher at 5:50 a.m., again after positive PMI data. U.S. stock market futures pointed to a small gain at the open.
At melting point
President Donald Trump said the U.S. can tackle the nuclear threat from North Korea on its own, if China doesn't cooperate to put pressure on the nation. The president is due to meet Chinese premier Xi Jinping on Thursday. Coming up in the U.S. today is manufacturing PMI at 9:45 a.m., with manufacturers also scheduled to release vehicle sales data for March throughout the day. That's projected to show sales of 17.3 million in total.
https://www.bloomberg.com/markets
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