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Brexit: Car production fell 44,5 % in April -Hammond to Tory race?

The UK car production fell 44,5 % in April according to the Society of Motor Facturers & Traders. The organisation estimates that the year-on-year production could fall by 10 %.

Manufacturing for domestic and overseas markets fell 44 % and 45 % respectively as the major companies were having production shutdowns due to Brexit timetable.

The Brexit-issue has also been in the politics. Chancellor of Exchequer Philip Hammond was speaking in the BBC Radio on Thursday and according to him the UK should reach to people if the UK Parliament cannot resolve the case. He was still stressing that the main objective for the Parliament is to proceed with the Brexit deal. He mentioned still that second referendum would be then better than a general election because of the hard situation in the Labour Party and Tories.

– It will be a stain on Parliament´s reputation if at the end, we have to admit that we have been unable to agree how to discharge the Brexit mandate from the people, he also said in the interview according to Independent newspaper.

Mr Hammond said he has a zero-tolerance approach to the breakdown or flouting of cabinet collective responsibility. He also mentioned that he might run for the Conservative leadership race  if there is no candidate who would reflect his thoughts properly.

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Asian stocks mixed – trade disputes continued (corrected)

Asian stocks were mixed on Thursday trading. The Japanese, South Korean and Chinese markets were open, while the Nordic markets were closed.  (Corrected the trading hours in Europe and in the US).

The Nikkei index 225 were trading 0,49%  % to 20 900 points while the HangSeng index in Hong Kong was trading down 0,50% to 27100 points, Shanghai A was down 0,96 % to 3023 points and the Kospi index was up 0,53 % to 2034 points in South Korea.

The main concern for the markets were the US China trade was and the new elements in the discussion. According the news agencies China has said that it will consider the rare earth elements in the trade war. These metals are used in  consumer goods and electronics. According to Reuters, China accounted for 81 % of the world rare earth production by the US Geological Survey.

In the fixed income markets, the US 10-year Treasury note yield traded yesterday at 2,26%, while the Treasury 3 month Treasury Bill 2,36 %. This yield curve inversion suggested that the economy is heading to a lower growth period. This has increased the worries of the economy situation and the trade war impact in general.

Company side for example the Chinese Alibaba, listed in New York, said that it will consider a 20 billion dollars secondary listing in Hong Kong due to the uncertain trade dispute.

The US dollar was trading slightly up and was up 0,10 % to 109,70 yens. The UK pound was nearly flat, up 0,05 % to 1,2632 dollars. The euro was unchanged at 1,113 dollars.

 

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Morningstar to buy Toronto DBRS with 699 million dollars

The US mutual funds rating company Morningstar has acquired a Toronto-based DBRS credit ratings. The 699 millions dollars deal was published on Wednesday.

According to Morningstar, it is entering the credit ratings markets with the acquisition, which is dominated by the three agencies S&P, Moody´s and Fitch. Morningstar says it will expand the global coverage and provide an enhanced platform.

DBRS, which is the fourth largest rating company in the world, reported a 167 million dollars revenue for the fiscal year ended November 2018.

 

 

 

 

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The negotiations of the EU top jobs started in Brussels

The EU leaders meeting in Brussels today was the start of the new leaders discussions in the EU. The German Chancellor Angela Merkel and the French President Emmanuel Macron expressed their different views of the new leader candidate for the EU Commission.

Manfred Weber has been the lead candidate for the EPP (centre-right), but President Macron was mentioning other candidates  for this position. This was the first time the EU leaders met after the EU elections last Sunday. Luxembourg´s Jean-Claude Juncker in stepping down on October 31st.

There are also other leading positions open to fulfil like European Council President (now Donald Tusk), the head of European Central Bank ECB (now Mario Draghi) and the EU representative for Foreign Affairs (now Federica Mogherini).

The EU elections last weekend put the seats in the EU Parliament to new order. Here are the main representatives for the 751 seats in the EU Parliament:

  • socialists & democrats (146)
  • greens (69)
  • liberals (109)
  • centre-rights (180)
  • conservatives (59)
  • populists (54)
  • right-wing nationalists (58)
  • left (39)

The timetable for the new leaders is somewhat open, others expect the names to be ready by July and others expect them during the autumn time.

 

 

 

 

 

 

 

 

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Auto stocks gained by the Fiat-Renault news (updated)

The auto stocks gained on Monday trading in Europe after the confirmation of the Italian-French car manufacturing merger proposal. Fiat Chrysler (FCA) and Renault (RNO) said that they are planning a 35 billion euros merger, which would make the new company the world’s third largest auto manufacturer. The planning of the merger was published on Saturday evening.

Fiat´s stock price jumped by 7,98 % to 12,37 euros and Renault´s 12,09 % to 56,03 euros. The Stoxx Europe 600 Automobiles & Parts index ended up 1,43 % to 473 points.

The idea of the auto merger is to get synergies, estimated of 5 billion euros, in the R&D related to electric cars and lower emissions, and in the purhasing power. The new company, owned by 50-50 % by a Dutch holding company, would have production of 8,7 million cars annually. Brands like Jeep, Maserati and Alfa Romeo would be part of the merger.

The Japan alliance partner Nissan Motor & Mitsubishi might join the new group later on. In order to proceed the Italian and French Governments will comment the merger in details during the next week.

Otherwise the German DAX-index gained 0,5 % to 12071 points and the French CAC 40 0,37 % to 5336 points. The shares of Volkswagen, the world´s largest car manufacturer, (VOW) ended up 0,55 % to 145,25 euros in Frankfurt.

In London the trading was closed due to the Spring Bank Holiday.

In the US, the stocks markets were closed while having Memorial Day holiday.

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Fiat Chrysler, Renault are in talks – WSJ

The European auto industry may be changing when the Fiat Chrysler (FCAU) and Renault (RNO) are in talks for a wide-ranging co-operation, writes the Wall Street Journal. According to the newspaper, if there is going to be an agreement, it would happen soon.

The auto makers have been discussing sharing vehicle platforms and engineering resources, the sources say. An option is also that Fiat will join a three-way alliance between Renault, Nissan Motor (7201) and Mitsubishi Motors

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Brexit: What next – stocks closed up

The yesterday announcement by the UK Prime Minister Theresa May that she will step down from the Party leader position on June 7 has left some questions how to proceed after this? Mrs May, who is highly respected by her counterparts, will stay as Prime Minister until the new leader is chosen- maybe in July.

The UK decision was not a surprise for the EU leaders. In fact, they were asking swift process in order to avoid possible bottlenecks between the countries business and economic transition process. For example the French President Emmanuel Macron said that he would like more clarification about the situation while “EU cannot remain indefinitely uncertain on Brexit”. According to him, France is ready to work with the new British Prime Minister on all issues.

The German chancellor’s Angela Merkel´s spokesperson said that Germany is ready to continue the work with Prime Minister Theresa May’s successor for an “orderly exit”.

And several other EU leaders have had same kind of message as well. They want to conclude the work and the agreement agreed with the EU and Mrs May. The message is still the same: the legal text of the withdrawal agreement will not be open.

This case has also raised the possibility of the no-deal Brexit after the Mrs May decision to leave. This is a major concern for the British Industry and the City as well. The Bank of England has made also several economic estimates which show that the no-deal Brexit would be catastrophic for the UK economy and for example housing prises.

The UK and EU have extended the Brexit deadline for several times and now the deadline is at the end of October, 31st. So, the UK Parliament has this timeframe in order to decide how to proceed. There is not that much time left, while it is assumed that the new UK Prime Minister might start his/her duties July/August time. As Prime Minister Theresa May said in her speech on Friday, the new leader will have to find a compromise in the Parliament in oder to get on with the Brexit.

On the other hand, it might also be possible, that the new Party leader is not willing to make a deal, so the no-deal Brexit might increase its appearance. According to Bloomberg News, two-thirds of Conservative members want a no-deal Brexit.

But the Labour Party in the UK Parliament is against no-deal scenario, which makes this approach uncertain. And the third option is also a new referendum or general elections, which would have to be before the end of October.

Now, in the middle of EU elections, the UK Conservative party is expected to face losses and this might have also its impact for the future of the UK and the Brexit process. The results of the EU elections are to be published on Sunday evening.

The UK stock markets closed Friday slightly up and the FTSE 100 -index ended +0,65 % to 7277 points. During one year time, the yield has been -1,68%. The pound was at 1,27 US-dollars, up 0,45 % on Friday. During a five year period the pound has fallen from the 1,7 US-dollars levels.

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