Theresa May survives confidence vote

Summary:

• PM Theresa May won the confidence vote and secured her leadership

• Equities in the US and Asia rise

• China begins buying more US soybean

May triumphs

As widely expected UK Prime Minister Theresa May secured enough votes to keep her leadership and continue negotiations regarding Brexit. In the confidence vote held on Wednesday evening May got 200 votes while only 117 votes were against her. Given the fact that she had needed a simple majority (at least 159 out of 315 MPs) her victory could be called a big one. After winning the confidence vote she cannot be challenged for another year implying that she could be able to continue negotiations with Brussels until the deadline in March 2019 unless she steps down in the meantime. When the results of the vote were published Theresa May said that “a significant number of colleagues cast a vote against me and I have listened to what they said”, and she continued saying “now it is time to deliver the Brexit the people voted for.” A response seen in the British pound immediately when the results were released was rather disappointing as the pound slid and erased its prior gains. However, it needs to be said that these gains were building over the entire day along with BBC’s revelations that more and more MPs are to vote for May. Since then, the British currency has been quite trendless being trading around 1.2620 against the dollar as of 6:30 am GMT. Overall, moves across the currency market have been rather benign with the greenback treading water and the Australian dollar rising 0.25% - the best performing major currency this morning. No noteworthy moves have arisen in the EM FX block either.

After touching the resistance nearby 0.9090 the EURGBP fell back below 0.90. As for now, one may assume that the cross could revisit the support placed in the neighbourhood of 0.8930 which could provide fresh fuel for bulls. Summing up the latest developments regarding Brexit one may arrive at a conclusion that nothing changed and we are at the same place we were at the beginning of this week. Source: xStation5

Stocks recover, upbeat news from China

Solid gains across European equity markets were also seen on Wall Street, though, their scale was less impressive. The NASDAQ (US100) closed 0.95% higher, the Dow Jones (US30) rose 0.6% while the SP500 (US500) increased 0.5%. In Asia investors may be cheerful as well - the NIKKEI (JAP225) jumped 1% while indices in Shanghai and Hong Kong are rising 1.2% each at the time of writing. Over the Asian hours trading we were offered the upbeat news that China, the giant Asian commodity importer, bought between 1.5 million to 2 million tons of American soybean over the past 24 hours, with shipments expected to occur during the first quarter, according to US Soybean Export Council. This move could be read as a gesture made by Beijing to ease tensions between the world’s two largest economies. The increased purchases are obviously positive to US farmers who have struggled to find buyers for their ample crops.

From a technical point of view soybean prices look to be poised to make a big rally even toward $1075 over the coming weeks but it could be a hard task anyway. The big challenger for soybean buyers are weak fundamentals as well as a risk related to a possible further escalation of the trade battle. If we saw some improvement at these fields, then the price would start picking up. Source: xStation5

In the other news:

• Australian inflation expectations rose to 4% in December from 3.6% in the previous month

• The European Parliament endorsed a landmark EU-Japan free trade agreement meaning that as much as 86% of duties on European exports to Japan will be removed when the accord comes into effect in February next year

• Italian PM Conte proposed to cut the deficit target to 2.04% of GDP for next year

• New Zealand lowered its forecast for GDP and budget surpluses, in the 2019/2019 fiscal year it expects a surplus of 1.72 billion NZD (3.74 billion NZD previously) and GDP growth at 2.9% (3.8%), the lower budget surpluses are also seen in the next two fiscal years, the Treasury expects the RBNZ to start hiking rates from mid-2020