Good morning! Here’s what you need to know on Wednesday.
Britain losing the financial passport will affect so much more than banking, according to market insight firm Mlex. Mlex obtained a full list of all 13,500 companies using financial passporting in some form in relation to the UK, and found that all types of businesses from newspapers to removals companies, all the way to a body that represents acupuncturists could be hit if Brexit causes the loss of the financial passport.
Chancellor Philip Hammond will adopt a new flexible fiscal framework in this month’s Autumn Statement. Hammond will get rid of strict targets for growth and spending to ensure the government has “headroom” to react if Brexit fallout hits the economy, the Financial Times reported on Tuesday night.
Germany is determined to deny Britain the Brexit it wants. That is according to economic expert Michael Huether, who was interviewed by German publication FAZ this week. Huether, director of the Cologne Institute for Economic Research, said Germany will prioritise the long-term interests of the European Union over its Anglo-German trade links when it sits down to negotiate Britain’s withdrawal from the 28-nation bloc.
Crude oil prices fell for a fourth day on Wednesday. The fall comes with jittery investors awaiting official U.S. stockpile figures later in the day after less comprehensive industry data showed a surprise build in inventories. The American Petroleum Institute (API) said crude stockpiles increased by 9.3 million barrels in the week to Oct. 28, more than nine times the amount expected by analysts polled by Reuters.
US stocks tumbled on Tuesday, with the S&P 500 touching its lowest level since July. October was the worst month for the market since January as the S&P 500 shaved its year-to-date gain to 3% from about 6%. The beginning of the third-quarter earnings season punctured the share prices of several companies on the major indices.
Asian shares are stumbling on Wednesday. Nerves came as signs that Republican US presidential candidate Donald Trump could be closing the gap with his Democratic rival Hillary Clinton spooked investors. around 6.50 a.m GMT (2.50 a.m. ET) Hong Kong’s Hang Seng is lower by almost 1.5%.
No matter who wins the US election, it will be bullish for the gold price. So says James Steel, chief precious metals analyst at HSBC, who believes that gold will continue to rally in the year ahead, particularly should Donald Trump take the presidency. “In addition to economic and financial events, gold is sensitive to geopolitical and even social developments,” said Steel in a research note released on Tuesday.
Unemployment is tumbling in New Zealand. The nation, dubbed the “rockstar” economy by some economists, has delivered yet again on Wednesday with the nation’s unemployment rate plummeting to 4.9% in the September quarter, the lowest level seen since late 2008. Markets had been expecting a figure of 5.1%, unchanged from the level of Q2.
A prominent Brexiteer hedge funder expects a recession in the UK. Crispin Odey, founder of Odey Asset Management and backer of the Vote Leave campaign, told clients to prepare for a recession and higher inflation in the wake of the Brexit vote. “The stock market could fall by 80%,” he said in a note to investors.
US manufacturing saw a stronger than expected October. The Institute of Supply Management’s purchasing manager’s index (PMI) came in at 51.9 for the month, above expectations of 51.7 and up from the prior month’s 51.5.
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