Speculations that the “meaningful vote” on the Brexit deal could be delayed were already in play earlier on, but pound sellers still put the pedal to the metal when PM May confirmed it.
It didn’t help that the EU seemed unwilling to renegotiate the deal they already signed off on, which trims May’s options down to a “no deal” Brexit or revoking Article 50, which the ECJ confirmed was doable with no penalty.
- Canadian housing starts up from 207K to 216K vs. 198K consensus
- Canada’s building permits fell by 0.2% as expected, previous 0.4% gain
- U.S. JOLTS job openings up from 6.96M to 7.08M vs. 7.22M forecast
- PM May: “Deal would be rejected by a significant margin” if vote pushed through
- EC President Tusk: Time running out, discussing “no deal” scenario preps
- U.K. parliament to hold emergency debate on the vote delay
- No. 10 to meet with Dutch Minister Rutte and German Chancellor Merkel next
Brexit “meaningful vote” delayed
In the previous trading session, the ECJ officially confirmed that the U.K. can reverse its Brexit notice without incurring any penalties. This further fueled speculations that PM May might delay the “meaningful vote,” which wouldn’t likely pass anyway, in order to weigh this option.
Just before MPs were able to warm up to yell their ayes or nays, PM May announced:
“From listening to these views it is clear that while there is broad support for many of the key aspects of the deal, on one issue, the Northern Ireland backstop, there remains widespread and deep concern. As a result, if we went ahead and held the vote tomorrow, it would be rejected by a significant margin.”
She went on to say that she plans on meeting with counterparts from other member states in order to discuss the concerns that the House has raised. By the looks of it, No. 10 still believes that the transition deal can be amended enough to gain parliament approval and the delay buys her more time to negotiate. May asked:
However, this was met by a resounding “No!” from several MPs and later on quite a stir as the ceremonial mace was grabbed by a Labor MP in protest.
“If you take a step back, it is clear this house faces a much more fundamental question: does this house want to deliver Brexit?”
May is scheduled to meet with Dutch Minister Rutte and German Chancellor Merkel next in hopes of seeking assurances that the Irish border backstop is unlikely to be enforced.
European Council President Tusk ruled out the possibility of renegotiating the deal since EU leaders have already previously approved it.
I have decided to call #EUCO on #Brexit (Art. 50) on Thursday. We will not renegotiate the deal, including the backstop, but we are ready to discuss how to facilitate UK ratification. As time is running out, we will also discuss our preparedness for a no-deal scenario.
— Donald Tusk (@eucopresident) December 10, 2018
Irish PM Varadkar also agreed to intensify preparations for a “no deal” scenario. However, he did suggest that they’re open to a non-binding statement “clarifying” parts of the Withdrawal Agreement if it helps May to pass the deal.
Some risk-taking before the close
Riskier assets were off to a rough start during the session as Brexit developments kept traders on edge. Equities made quite the turnaround before the closing bell tolled.
- Dow 30 index dipped to 23,881.37 then pulled up to close 34.31 points up (+0.14%)
- Nasdaq pulled up from a low of 6,878.98 to close 51.27 points higher (+0.74%)
- S&P also clawed its way back to the green to close 4.64 points up (+0.18%)
The rebound is being pinned on a large recovery in Apple shares from an earlier slump spurred by chip supplier Qualcomm’s preliminary order from a Chinese court.
Crude oil was still mostly weaker as demand concerns resurfaced, even after the OPEC agreed to curb supply in their meeting last week.
Major Market Mover(s):
Market watchers had been buzzing about a likely delay to the “meaningful vote” in parliament as journalists got wind of a conference call scheduled by No. 10.
The pound was already reeling at the start of the session, but more bears came out in full force when PM May confirmed the delay.
Cable slipped from 1.2712 to its 20-month low of 1.2506; GBP/JPY fell from 143.29 to 142.39 then tumbled further to a low of 147.18; EUR/GBP popped up from .8971 to .9087, and GBP/AUD sank to 1.7467.
Watch Out For:
- 11:50 pm GMT: Japanese BSI manufacturing index
- 12:30 am GMT: Australia’s HPI q/q (-1.5% expected, -0.7% previous)
- 12:30 am GMT: Australia NAB business confidence index (previous reading of 4)
- 6:00 am GMT: Japanese preliminary machine tool orders