While Britain grapples with its exit from the EU, France’s Emmanuel Macron is seeking to re-shape it. He embarks on a tour of central and eastern Europe this week before hosting key western European allies for talks in Paris. On the first leg, he will be pushing for a tightening in rules surrounding so-called “posted workers” who are sent by companies in their home country to work in another EU state.
France has long complained that this has led to disruptive wage and social dumping whereby the lower labour protection standards and wage levels of one country are effectively imported into another – the haulage and construction sectors in particular have been hit, it says. Macron will be trying to win backers for his arguments in the Czech Republic, Slovakia, Romania, Bulgaria and Austria – note, however, the absence from this list of Poland and Hungary, whose leaders have both had verbal sparring episodes with Macron.
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The ambition for the Paris talks with German, Italian and Spanish leaders next weekend will be to start laying the ground for further integration within the bloc. Little concrete progress can be made ahead of German elections next month but discussions are seen focusing on the euro zone, defence cooperation and immigration.
As promised, meanwhile, Britain will publish another of its position papers on its future ties with the European Union. It’s all getting a bit technical – one paper will be on the sale and distribution of goods, the other on how to ensure the confidentiality of EU documents exchanged post-Brexit. This is not ground-breaking stuff but is part of London’s wider effort to convince Brussels to move talks beyond the first phase – despite the EU’s Michel Barnier having said he doesn’t think enough progress has been made on the first set of issues (citizen rights, the divorce bill, Northern Ireland border). The risk is that this only feeds the impression that London and Brussels continue to talk past each other.
MARKETS AT 0655 GMT
Global stocks are holding close to the 5 1/2-week lows hit on Friday after the departure of Donald Trump’s chief strategist raised further doubts over whether the U.S. president would be able to implement his tax reform and spending plans.
European shares have opened slightly lower, adding to Friday’s 0.7-percent fall in the STOXX 600 index. Asian stocks eked out gains of 0.1 percent, with investors wary of a rise in tensions on the Korean peninsula as the United States and South Korea begin computer-simulated military drills, but Tokyo shares fell 0.4 percent with traders citing U.S. political problems. The S&P 500 hit a six-week low on Friday and has fallen 2.1 percent in the last two weeks, but is still up 13.4 percent since last November’s presidential election.
With company news thin on the ground, strong metals prices, with London zinc rising to its highest in a decade, should help cap losses for European shares, with miners seen rising 1 to 2 percent in pre-market indications. Oil stocks were also expected to be stronger as crude prices crept higher.
Intesa Sanpaolo shares could be hit today by news which broke after the market on Friday that a U.S. subsidiary of the Italian bank would have to pay $35 million to U.S. regulators over improper American Depositary Receipts. Some 87 percent of MSCI Europe companies have reported quarterly results, with around 60 percent either beating or meeting expectations.
Company news and potential stock movers: Georgia’s TBC Bank second-quarter profit buoyed by strong lending; John Wood five-year maintenance service contract for Phillips 66 refinery; U.S. subsidiary of Italy’s Intesa Sanpaolo to pay $35 mln over improper ADRs- SEC; Vontobel to buy eastern European private banking portfolio from Notenstein.
Otherwise, markets seem to be starting the week in relative calm, with many investors looking ahead to the week’s main set-piece, the annual gathering of central bankers in Jackson Hole, Wyoming. ECB chief Mario Draghi speaks but is seen unlikely to deliver any new message on the central bank’s plans to begin withdrawing stimulus.
The dollar is recovering a bit after falling on the White House turmoil, rising 0.1 percent against a basket of currencies. The euro is down 0.1 percent at $1.1742, the yen is flat at 109.17 per dollar and sterling is up 0.3 percent at $1.2860.
In debt markets, German 10-year government bond yields are up 2 basis points at 0.42 percent while U.S. equivalents are up slightly at 2.2 percent. Little reaction so far to Fitch upgrading Greece’s credit rating on Friday to B-. S&P had already raised Greece to B-.
Metals are doing well. Zinc hit a fresh decade-high and nickel is also up on expectations of Chinese demand for steel. Copper is up 0.9 percent at $6,544 a tonne, close to its highest since November 2014, and gold is up 0.2 percent at $1,287.
Emerging market shares and currencies made little headway on Monday, with investors reluctant to stake out new positions before Jackson Hole. EM stocks enjoyed a 1.5 percent gain last week, which was their best in a month. China shares remain the hotspot, up again on Monday having jumped 2 percent last week.