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U.K. Supreme Court rules against the U.K. government, Mnuchin says a too-strong dollar may hurt the U.S. economy, and growth prospects look good in the euro area. Here are some of the things people in markets are talking about today.
The British Supreme Court ruled this morning that U.K. Prime Minister Theresa May must seek the permission of parliament to trigger Article 50 of the Lisbon Treaty to start the country's exit from the European Union. The 11-judge court said, however, that the devolved administrations in Wales, Scotland and Northern Ireland would not need to be consulted on the decision to trigger Brexit talks. The pound, which dropped in the immediate aftermath of the announcement, was trading broadly unchanged at $1.2496 by 5:09 a.m. ET.
The dollar slumped to the weakest level in six weeks yesterday after U.S. Treasury Secretary nominee Steven Mnuchin said an “excessively strong dollar” could have a negative short-term effect on the economy. The greenback has reversed those declines this morning as investors continue to digest the policies signed by President Trump yesterday, including the withdrawal from the Trans-Pacific Partnership. The Bloomberg Dollar Spot Index was 0.1 percent higher at 5:23 a.m. ET, and is down 1.7 percent so far this year.
Euro area growth
Although composite PMI for the euro area slipped slightly to 54.3 in January, IHS Markit said economic momentum in the single-currency area remains robust. Inflation pressures are starting to build, according to the report, but are being driven by commodity price rises and import costs due to the weakening euro. Economic prospects in France, which is facing a presidential election this year, also look positive, with the composite PMI rising to 53.8, the highest since June 2011.
Overnight, the MSCI Asia Pacific Index dropped 0.1 percent while Japan's Topix index ended the session down 0.6 percent, for its lowest close since Dec. 7. In Europe, the Stoxx 600 Index had added 0.3 percent by 5:39 a.m. ET with miners leading the gains. S&P 500 futures were broadly unchanged.
BT Group Plc saw its stock drop as much as 19 percent this morning after the company cut its outlook for the coming years and revealed "inappropriate behavior” in its Italian unit had forced a tripling of provisions for losses there. Aryzta AG dropped as much as 35 percent after a profit warning due to the loss of manufacturing contracts in the U.S. There was better news for shareholders of Italian insurer Assicurazioni Generali SpA, which saw a jump of as much as 11 percent on reports Intesa Sanpaolo SpA is considering an all-stock offer.
What we've been reading
This is what's caught our eye over the last 24 hours.
- It's time to talk about the Federal Reserve's balance sheet.
- Hedge fund assets passed $3 trillion for the first time in 2016.
- Merkel hits back at populists in defense of refugee stance.
- Bundesbank finds euro weakens on QE signalling not actual asset purchases.
- Robots are taking over oil rigs.
- Trading plunges at China's bitcoin exchanges after fees levied.
- Preparing for the end of the world.