Good morning! Here’s what you need to know in markets on Tuesday.
Theresa May will on Tuesday rule out any Brexit deal that leaves Britain “half-in, half-out” of the EU, as she sets the country on course for a “Hard Brexit.“ The prime minister will reject any settlement that amounts to “partial membership” of the EU, suggesting that the UK will leave both the single market and the customs union. May delivers her speech at 11.45 a.m. GMT (6.45 a.m. ET) this morning.
Ministers are drawing up plans for a two-tier system of UK border controls for EU citizens. The Financial Times reports that senior government officials expect the prime minister to decide on a system based on work permits and new automated security checks — similar to the US visa-waiver programme — for EU citizens travelling to Britain.
The pound has steadied but is still weak ahead of May’s speech. After diving against the dollar and euro on Monday, the currency is making up some ground in early trade on Tuesday. Sterling is up 0.55% against the dollar to $1.2115 at 6.25 a.m. GMT (1.25 a.m. ET) and up 0.05% against the euro to €1.1371.
Rolls-Royce has reached settlements with authorities in Britain, the United States, and Brazil relating to bribery and corruption involving intermediaries, which would result in a series of payments totalling £671 million ($809 million). The deals would see the maker of engines for military jets, ships and nuclear-powered submarines pay about £293 million in the first year, Rolls-Royce said in a statement.
Asian markets are mixed. Japan’s Nikkei closed down 1.48% and China’s benchmark Shanghai Composite is down 0.02% at the time of writing (6.40 a.m. GMT/1.40 a.m. ET), but the Hong Kong Hang Seng is up 0.47%.
Deutsche Bank, the former Wall Street powerhouse, may hold back on giving out bonuses to as many as 90% of bankers and traders, The New York Post reports. Only the top 10% of revenue generators may get a bonus for 2016 — and even then it will be paid out over the next five years, according to a source briefed on internal discussions.
Precious metal prices are rallying. Gold is up 1.19% to $1,210.45 at 6.30 a.m. GMT (1.30 a.m. ET) and silver is 1.12% higher at $16.95. CMC Markets chief market analyst Michael Hewson says in an email on Monday: “The cautious buying of gold that has been taking place over the last three weeks has continued today as uncertainty over US foreign policy towards China, and other political risk has seen the yellow metal hit its highest levels since November last year.”
Inflation data is coming. The latest stats on price changes in the UK are due at 9.30 a.m. GMT (4.30 a.m. ET). The Consumer Price Index is expected to rise by 0.3% on the prior month in December and 1.4% on an annual basis.
General Motors will announce as early as Tuesday long-held plans to invest about $1 billion (£830 million) in its US factories, following recent criticism of the company by President-elect Donald Trump, a person briefed on the matter told Reuters late on Monday. The largest US automaker is making the decision for business and not political reasons, said the person, who asked not to be identified.
The bulk of the world’s CEOs are more concerned about the burgeoning workers’ skills gap than political uncertainty from Brexit, US President-elect Donald Trump’s policies, or the rise of populism across Europe. The leaders of companies are growing more confident in their groups’ growth prospects too, according to the 20th annual survey of CEOs worldwide by one of the largest accounting firms in the world, PwC.