“Brexit Latest News…”

Brexit Latest News

Prime Minister Theresa May won legally binding Brexit assurances from the EU on Monday as she rushed to Strasbourg to agree additional assurances with European Commission President Jean-Claude Juncker.   May promised lawmakers a vote on her deal on Tuesday. The motion put forward by the government said that the joint instrument “reduces the risk” that the United Kingdom would be trapped in the backstop.    British lawmakers rejected May’s divorce deal on Tuesday forcing parliament to decide within days whether to back a no-deal Brexit.    Lawmakers voted against the Brexit amended deal by 391 to 242 as the talks May had on Monday with EU chiefs proved fruitless.  The British parliament on Wednesday rejected leaving the European Union without a deal, further weakening Prime Minister Theresa May and paving the way for a vote that could delay Brexit until at least the end of June.  Lawmakers defied the government by voting 321 to 278 in favour of a motion that ruled out a potentially disorderly “no-deal” Brexit under any circumstances.  Sterling rose more than 2 percent on the rejection of “no-deal” and headed for its biggest daily gain this year.  Meanwhile, on Thursday British lawmakers voted to seek a delay in Britain’s exit from the EU.   Lawmakers approved by 412 to 202 a motion setting out the option to ask the EU for a short delay if parliament can agree on Brexit deal by 20^th March or a longer delay if no deal can be agreed in time.  The vote makes it likely that the 29^th March departure date as set down in the law and which had been emphasised by Theresa May  is likely to be missed however it is unclear by how long.  The short delay envisaged in the motion could last until 30^th June but the longer extension is not currently time-limited.  Either way it would require unanimous approval from the other 27 EU member states whose leaders meet in a summit next Thursday.  Earlier on Thursday lawmakers voted by 334 to 85 against a second referendum on EU membership.  Thursday’s vote does not mean a delay is guaranteed as EU consent is needed and the default date for Britain to leave if there is no agreement is still 29^th March.  May said she will hold another vote next week on her deal, however, lawmakers have already rejected it twice. The British pound did not change on Friday at the end of its best week since January.  Sterling rallied this week and is up 1.7 percent against the dollar.

UK Economy Starts The Year On Stronger Than Expected Footing

The UK economy rebounded at a stronger than expected pace in January following a downbeat end to 2018, the Office for National Statistics published on Tuesday.  Gross domestic product grew 0.5 percent, which is the biggest monthly gain in more than two years, after it shrank 0.4 percent in December.  The comeback in GDP in January was broad based, with construction, manufacturing and the dominant services sector all increasing output following declines in December.  Brexit fears are holding back spending.     The ONS said there was no evidence of widespread stockpiling ahead of Brexit, despite a pickup in imports of medicinal pharmaceuticals in January.

UK Cuts Growth Forecast For 2019

Britain has lowered its official forecast for economic growth in 2019, said Finance Minister Philip Hammond as he delivered a half-yearly budget update.  Whilst in October of last year the full budget statement disclosed an expected forecast for gross domestic product of 1.6 percent, the forecast is now down to 1.2 percent.  The main factors contributing to a lower growth forecast are Brexit and the slowdown in the world economy.

Norwegian Crown

The Norwegian crown rallied across the board on Monday after strong inflation data raised expectations that the central bank could increase interest rates soon.  Norwegian core CPI data for February was 2.6 percent on an annualised basis, above the Central Bank’s long-term target of 2 percent.  Norges Bank (the Central Bank of Norway) last year tightened monetary policy for the first time since 2011, lifting its rate to 0.75 percent from a record-low 0.5 percent.  The central bank said it aims to raise rates another five times by the end of 2021.

Turkey Enters Recession

Turkey fell into its first recession in a decade as the country heads toward municipal elections this month.  Gross domestic product shrank a seasonally adjusted 2.4 percent last quarter from the previous three months, when it declined a revised 1.6 percent according to data released on Monday.  Erdogan pushed at all costs for growth and on the central bank to keep interest rates low.  Capital poured into Turkey during an era of record monetary stimulus around the world.  However, an uninterrupted expansion that lifted the economy by an average of nearly 7 percent each quarter since late 2009 fizzled out amid a currency crash, policy missteps, and unprecedented diplomatic rift with the US.   Efforts to restart growth, included the government putting pressure on state banks to ramp up lending, helping annualised credit growth turn positive last month for the first time since August.

German Industrial Production

German production fell in January showing that the economy is still suffering from trade frictions and unease about Brexit.  With the data, Eurozone bond yields dipped on Monday and the German 10 year bond yield, which is the benchmark for the region, slipped to 0.06 percent in early trade.

US Inflation Data

The Labour Department said on Tuesday its consumer price index grew 0.2 percent in February in line with estimates, amid gains in the costs of food, gasoline, and rents. The index was unchanged for three straight months.  Excluding the volatile food and energy components, the CPI edged up just 0.1 percent, the smallest increase since August 2018.  Meanwhile, in the 12 months through February, the CPI rose 1.5 percent, the smallest gain since September 2016.  After the data showed this modest rise in core inflation, US Treasury yields drifted lower on Tuesday.  The US 10 year note yields fell to 2.639 percent down from 2.641 percent on Monday, the US 30 year bond yields were slightly down at 3.031 percent from 3.032 percent on Monday, while the US 2 year yield slipped to 2.471 percent compared to Monday’s 2.477 percent.

Fed’s Chairman Jerome Powell

On Sunday Fed Chairman Jerome Powell said that the US central bank does not “feel any hurry” to change the level of interest rates again as it watches how a slowing global economy affects the local conditions in the United States.  He called the current rate level as “appropriate” and roughly “neutral”.  Regarding Trump, Powell said that it would not be “appropriate for him to comment on Trump’s remarks, as the latter called the Fed “crazy” for raising interest rates four times last year.  The target federal funds rate, which is currently at a range of between 2.25 and 2.5 percent remain low by historical standards.  Powell said that the Fed would “never, ever”, take “political considerations” into account in deciding on interest rates.

China’s Industrial Output Growth

Growth In China’s industrial output fell to a 17 year low in the first two months of the year whilst  the jobless rate rose, signalling a further weakness in the world’s second-biggest economy.  Subsequently this could trigger further support measures from Beijing.  Other data on Thursday showed that property investment was picking up, while overall retail sales are sluggish but steady.  China is raising its efforts to support the economy.  In fact Premier Li Keqiang last week announced hundreds of billions of dollars in additional tax cuts and infrastructure spending.

China-US Trade Talks

US President Donald Trump said on Wednesday he was in no rush to complete a trade pact with China and insisted that any deal should include protection for intellectual property, a major sticking point between the two sides during months of negotiations.  Washington accuses Beijing of forcing US companies to share their intellectual property and transfer their technology to local partners in order to do business in China.  Beijing denies it engages in such practices.    The president, while speaking to reporters at the White House, said he thought there was a good chance a deal would be made, in part because China wanted one after suffering from the imposition of US tariffs on its goods.

Markets Wrap

On Monday emerging market stocks rose, led by Chinese shares, after the central bank pledged more support for a slowing economy.   Meanwhile the S&P and Nasdaq futures edged higher on Monday after inflation data showed US consumer prices in February rose for the first time in four months.  The world’s largest plane maker Boeing which is the best performing Dow component this year by a wide margin, fell as much as 13.4 percent on Monday and weighed on the Dow Jones Industrial Average.  Countries grounded the plane maker’s bestselling line of jets amid heightened anxiety among travellers about the safety of the plane.  The blue-chip Dow pared losses and all three indexes ended Monday higher, boosted by a tech-led rally.  After Britain and the EU agreed tweaks to British withdrawal agreement, that eased some fears of a no-deal Brexit on 29^th March, Irish shares outperformed the rest of the Eurozone on Tuesday.  Dublin’s ISEQ climbed 1.4 percent set for its biggest gain since 5^th February.  Britain’s FTSE 100 fell 0.1 percent as a surge in sterling after the news weighed on the multinational exporters that dominate the index.  In euro terms, the FTSE 100 has been outperforming European peers.  On Wednesday, European shares opened broadly flat amid uncertainty over Brexit.  Meanwhile, US stocks rose broadly on Wednesday, after fresh economic data strengthened the stance taken by the Federal Reserve over the future rate hikes and as Boeing rose for the first time since Sunday’s deadly crash of a 737 MAX 8 jet in Ethopia.  On Thursday European shares were higher after British parliament voted to reject a disorderly Brexit.  Meanwhile Asian shares slipped after Chinese data signalled further weakness in the world’s second-biggest economy.  On Friday emerging market currencies and stocks rose as investor sentiment was lifted on reports that Beijing and Washington progressed in their trade talks.

Oil

The International Energy Agency (IEA) said on Monday that the United States will drive global oil supply growth over the next five years, adding another 4 million barrels per day to the country’s already booming output. In its five-year outlook, “The United States is increasingly leading the expansion in global oil supplies, with significant growth also seen among other non-OPEC producers including Brazil, Norway and new producer Guyana.”  Furthermore, the IEA, “continues to see no peak in oil demand, as petrochemicals and jet fuel remain the key drivers of growth, particularly in the United States and Asia, more than offsetting a slowdown in gasoline due to efficiency gains and electric cars.”  It further said that Iraq would reinforce its position as a top producer, becoming the world’s third largest source of new supply and driving growth within OPEC.  IEA said that, “the increase will have to compensate for steep losses from Iran and Venezuela, as well as a still-fragile situation in Libya.” On Wednesday, oil prices rose after an official forecast showed slower than expected US production and US sanctions stalled exports from Venezuela.  EIA also said on Tuesday that US crude production was expected to grow more slowly in 2019 than it had previously expected, averaging about 12.30 million barrels per day.  Oil prices have been pushed up this year by supply cuts led by the Middle East-dominated OPEC. On Thursday, oil prices rose with Brent crude futures marked a 2019-peak of $67.84 per barrel whilst US West Texas Intermediate crude futures were at $58.42 per barrel close to a November 2018 high of $58.48 per barrel.

Malta:  Gross Domestic Product 2018

Provisional estimates indicates that Gross Domestic Product (GDP) for 2018 amounted to EUR 12,320 million, an increase of EUR 1,006.5 million (8.9 percent) when compared to 2017.  In terms of volume, GDP went up by 6.6 percent.

Malta:  Index of Industrial Production – January 2019

In January 2019, seasonally adjusted industrial production increased by 2.3 per cent over the previous month.  When compared to January 2018, the index of industrial production adjusted for working days increased by 2.8 percent.

Malta:  Inbound Tourism – January 2019

Total Inbound visitors for January were estimated at 127,723 an increase of 2.4 percent when compared to the corresponding month.  Inbound tourists from Non-EU member states went up by 14.6 percent (2018: 20,788).  A total of 114,551 inbound tourist trips were carried out for holiday purpose, while a further 9,461 were undertaken for business purposes.

Company News

Boeing

A crash that killed 157 people, left the world’s largest plane maker facing its worst crisis in years.   The crash was the second disaster involving the 737 MAX, the world’s most-sold modern passenger aircraft, in less than five months.  New information from the wreckage in Ethiopia and newly refined data about the plane’s flight path indicated some similarities between the two disasters.  The US Federal Aviation Administration (FAA) cited new satellite data and evidence from the scene of Sunday’s crash in Ethiopia for its decision to join Europe, China and other nations in suspending 737 MAX flights.  President Donald Trump announced that the planes will be grounded.   Boeing, which maintained that its planes were safe to fly, said in a statement that it supported the latest FAA move.  Shares of the world’s largest plane maker took their biggest beating this week following the plane crash.

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