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High hopes for a Brexit deal in the earlier session were met as EU and U.K. negotiators agreed on a draft text to be presented by PM May soon.

The euro and pound inched higher on the news but returned some of their gains as PM May faces the difficult challenge of getting the backing of other U.K. officials.

Meanwhile, crude oil chalked up yet another day deep in the red, with the declines starting to weigh on energy shares and overall sentiment.

  • U.S. NFIB Small Business Index down from 107.9 to 107.4
  • U.S. federal budget deficit narrowed from $119.1B to $100.5B
  • Italian gov’t kept 2019 estimates for budget and GDP unchanged
  • Brexit negotiators agreed on draft deal to be presented by PM May this Wed
  • U.K. opposition parties still demand “meaningful vote” on Brexit
  • Sources: EU Brexit Summit set for Nov. 25 if U.K. agrees on draft deal
  • Chinese data dump coming up

Major Events/Reports:

More Brexit updates

Hints of progress in the earlier trading session provided a good preview of what eventually transpired as negotiators were finally able to reach an agreement on a Brexit deal text.

Details of the draft agreement were leaked to British and Irish media, but it didn’t take long before a spokesperson for No. 10 confirmed that PM May will be meeting with members of the cabinet to pitch the deal on Wednesday 2:00 pm GMT.

If cabinet members approve the text, an EU Summit for Brexit could be convened for November 25. However, members of the opposition have been vocal about not giving their support.

Labour Party leader Jeremy Corbyn, Ian Blackford, leader of the Scottish National Party in the British parliament, and Liberal Democrat leader Vince Cable already penned a letter calling for a “truly meaningful vote” on the transition deal, stating:

“Recent interventions from government ministers have suggested that you and your government may seek to limit or constrain the process on the final vote, in an attempt to muzzle Parliament. We want to be clear that this would be wholly unacceptable.”

In an interview with the BBC, Vince Cable also mentioned:

“The problem is it has to come to parliament, and all we know about the views of different people across the political spectrum is a deal of this kind is not going to get through.”

Not surprisingly, former London Mayor Boris Johnson pointed out that he would vote against the draft deal:

“For the first time since partition Dublin under these proposals will have more say in some aspects of the government of Northern Ireland than London. I don’t see how you can support it.”

Of course there have been some members such as Raab, Hunt, Gove, and Cox who have expressed support for the draft agreement. Keep in mind, though, that PM May needs to secure at least 320 “Aye” votes in the 650-seat parliament to get the deal through.

Italy refuses to budge

In response to the European Commission’s rejection and call for revisions on the 2019 budget, Italy decided to maintain its forecasts for growth and its deficit.

The Italian government stuck to its deficit target of 2.4%, which is way beyond the limit set by the EU, but pledged to keep its spending closely monitored. It also insisted that tax cuts and other fiscal plans would produce 1.5% growth in the coming year and that they’d be able to raise more money by selling state-owned property.

Crude oil slide hits equities

Another day in the red for crude oil! The rout has brought the commodity price down to its one-year low and has taken its toll on energy shares, dragging most indices in the red:

  • Dow 30 index is down 100.69 points to 25,286.49 (-0.40%)
  • S&P 500 index is down 4.04 points to 2,722.18 (-0.15%)
  • Nasdaq is flat at 7,200.88 (0.00%)

Market analysts point to an extension of the slump since the start of the week, which was seen to be spurred by Trump’s calls to maintain output levels.

  • WTI crude oil slumped to $55.69 per barrel (-7.10%)
  • Brent crude oil is down to $65.47 per barrel (-6.61%)

Major Market Mover(s):

GBP

Sterling squeezed out a few more gains on confirmation that a Brexit deal text was agreed upon. However, it retreated when it dawned on traders that PM May might not even get the deal through parliament.

GBP/USD climbed to a high of 1.3048 then fell back to 1.2943; GBP/JPY turned from a high of 148.71 to drop to 147.38; EUR/GBP bounced off a low of .8656, and GBP/AUD slipped after hitting a high of 1.8066.

Watch Out For:

  • 11:30 pm GMT: Australia’s Westpac consumer sentiment index
  • 11:50 pm GMT: Japanese preliminary GDP (0.3% contraction expected)
  • 12:30 am GMT: Australia’s wage price index q/q (another 0.6% gain eyed)
  • 2:00 am GMT: Chinese fixed asset investment ytd/y (gain from 5.4% to 5.5% projected)
  • Chinese retail sales y/y (no change from 9.2% expected)
  • China’s industrial production y/y (no change from 5.8% expected)
  • 4:30 am GMT: Japan’s revised industrial production (no change from 1.1% drop)
  • Japanese tertiary industry activity index (0.4% decline eyed)