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Brexit delay request sends pound reeling
LONDON, March 21, 2019 (BSS/AFP) – The pound fell sharply on Wednesday
after Prime Minister Theresa May announced Britain was seeking a delay to its
exit from the European Union until June 30, while investors awaited the US
Federal Reserve’s interest rate call.
“The pound’s Wednesday only got worse after the confirmation that Theresa
May is seeking a short delay from the EU, one that arguably does not give the
government enough time to get through a sterling-positive Brexit deal,”
Spreadex analyst Connor Campbell told AFP.
“It appears that, despite the various votes highlighting MPs unwilling to
leave the EU without a deal, that kind of disastrous exit is still very much
on the table.”
The pound lost about half a pence in the space of roughly 10 minutes after
May announced the delay, falling to $1.3147, bringing its loss for the day to
around one percent.
May had been widely expected to ask the bloc for an extension of the March
29 deadline for leaving, having seen her exit proposals twice rejected MPs.
The European Commission, for its part, warned EU leaders in an internal
briefing note ahead of an summit in Brussels that delaying Brexit to June 30
would bring “serious legal and political risks”.
It urged a shorter postponement to before European Parliament elections in
May, or a much longer one at least till the end of this year.
European Council president Donald Tusk said later Wednesday that EU
leaders could approve a short delay to Brexit if British lawmakers finally
approve the withdrawal deal they have twice rejected.
– Fed watch –
Later Wednesday, the Federal Reserve’s March policy meeting concludes,
with analysts predicting it will announce a slower pace of interest rate
hikes as the world’s biggest economy shows signs of softening amid trade
tensions.
Investors also eyed China-US trade talks, optimism about which have helped
propel equities higher across the world this year — offsetting concerns
about the outlook for the global economy,
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But dealers have been spooked by a report that some US officials are
feeling some pushback from China on a number of demands, including on the
crucial issue of intellectual property.
The unnamed negotiators said the Chinese side was growing concerned at the
lack of assurances that US duties would be removed, according to the
Bloomberg story.
– ‘Floodgates could open’ for Bayer –
In Europe, Frankfurt fell the heaviest with Bayer shares tumbling after a
US jury ruled its weedkiller Roundup was a “substantial factor” in an amateur
gardener’s cancer.
Frankfurt stocks meanwhile sank 1.6 percent as the threat to German giant
Bayer and its subsidiary Monsanto from US litigation swelled.
A wave of lawsuits has put pressure on Bayer since its $63-billion
takeover of Monsanto last year, spooking investors who worry damages payouts
could escalate if the firm fails to convince courts its product is safe.
“Bayer shares have sold-off sharply … after a US jury found that the
company’s weed killer, Roundup, caused cancer,” said CMC Markets analyst
David Madden.
“This could open the floodgates to further cases, and the group might have
to set aside vast sums of money for potential cases.”
Bayer finished the day down 9.6 percent at 63 euros.
– Key figures around 1530 GMT –
Pound/dollar: DOWN at $1.3205 from $1.3268 at 2100 GMT on Tuesday
Euro/pound: UP at 85.99 pence from 85.56 pence
Euro/dollar: UP at $1.1355 from $1.1352
Dollar/yen: DOWN at 111.38 yen from 111.39 yen
London – FTSE 100: DOWN 0.5 percent at 7,291.01 points (close)
Frankfurt – DAX 30: DOWN 1.6 percent at 11,603.89
Paris – CAC 40: DOWN 0.8 percent at 5,382.66
EURO STOXX 50: DOWN 0. percent at 3,3
New York – DOW: DOWN 0. percent at 25,8
Tokyo – Nikkei 225: UP 0.2 percent at 21,608.92 (close)
Hong Kong – Hang Seng: DOWN 0.5 percent at 29,320.97 (close)
Shanghai – Composite: FLAT at 3,090.64 (close)
Oil – Brent Crude: UP 68 cents at $68.29 per barrel
Oil – West Texas Intermediate: UP 72 cents at $59.75
BSS/AFP/HR/1000