O poveste cu două # Brexits

And that the day after the leader of the City of London, Catherine McGuinness, said Brexit would cost Britain anywhere from 3,500 to 12,000 financial services jobs in the short-term. Further out, the losses could be even greater, she said.

But McFarlane predicts no terminal damage to London’s position. Meanwhile, banks opening bases in the European Union ahead of Brexit are having to show British regulators how they will build up the hubs over coming years to avoid ending up with empty shells.

And in a sign of the difficulties Prime Minister Theresa May faces getting the EU divorce settlement she thinks the UK deserves, Germany, has signalled that Britain would have to move its negotiating position if it hopes to avoid a disorderly or ‘hard’ Brexit next March.

Ministrul german de externe, Heiko Maas said that included on the land border between EU member Ireland and British administered Northern Ireland, an issue so fraught it could bring down May's government.

Buoyant US earnings, the promise of more stimulus in China and President Trump’s offer of $12 billion aid la US farmers have propelled world stocks back to five-week highs after Wall Street closed at the highest since early February on Tuesday (24 July).

The momentum has stalled somewhat though, as investors wait for fresh developments on the Chinese front and more importantly, on trade, as European Commission President Juncker met Trump on Wednesday (25 July).

The EU has already said it won’t negotiate “with a gun to our head” so, given Trump’s blustering style, the starting point isn’t that great. Trade commissioner Malmstrom has said too that the EU is preparing tariffs on $20 billion of US goods should talks fail.

But the EU budget commissioner Oettinger has suggested in a more conciliatory note the EU would be prepared to discuss mutual tariff cuts provided the US first drops levies on aluminium and steel.

On the other market-moving issue of the week – Japanese policy – things too seem calmer. A Reuters story on Monday (23 July) moved Japanese bond yields to six-month highs and drove an unprecedented 10 basis point steepening in the Japanese curve, with spill-over to the eurozone and Treasury market.

But the moves have stabilised and today’s Bank of Japan market operations went off without any hint that something could change at the July 31 policy meeting.  Bond yields in the eurozone and the US have eased after the recent rise.

The Nikkei is up half a percent while mainland Chinese shares are flat but Asian tech shares continue to trade strongly following Google’s blowout results on Monday. Hong Kong is up almost one percent.

On the data front today, there is the German Ifo business confidence and U.S. new home sales. German PMI bounced yesterday so we might well see a rise in the Ifo too, given the trade war hasn’t really gotten going yet.

Currency markets are barely moved amid apprehension over the Juncker-Trump talks but sterling is firmer at one-week highs following yesterday’s 0.3 percent gain triggered as the dollar slipped and PM Theresa May announced she was pushing aside arch-Brexiter Dominic Raab as Brexit negotiator and taking over EU talks herself. The Turkish lira has bounced 0.5 percent after falling 3 percent on Tuesday.

Bursele europene looked vulnerable to profit-taking after a surge in mining shares took the pan-European index to five-week highs in the previous session. But markets have opened marginally higher. In one of the busiest days of this second-quarter earnings season investors have plenty to get their teeth into.

Deutsche Bank results are unlikely to deliver strong share price moves after the rare good news for the stock was pre-released last week.  LVMH, which reported strong results and no material impact from trade tensions, could deliver a welcome boost to the luxury sector seen as vulnerable to rising protectionism.  The stock was seen rising 1 to 2 percent. (UBS analysts on Tuesday said the sector, highly exposed to China and the U.S., risks falling as much as 30 percent in a full-blown trade war).

One company hit by trade war fears, however, was Deutsche Bank asset management arm DWS, which cut its 2018 inflows guidance, citing market volatility caused by rising trade tensions. Its shares were seen falling 2-5%.  Chipmaker STMicro followed up on peer AMS’ strong results with an upbeat sales growth forecast for the third quarter.

In other dealmaking news, a report that Chinese conglomerate Fosun International is considering a bid for Belgian insurer Ageas has moved Aegeas shares up 5% at open.

TV stocks were also likely movers. Britain’s ITV is down almost 1% due to a cautious outlook despite reporting a first half boosted by the World Cup and “Love Island”. France’s TF1 meanwhile has opened 4% higher after results.

Emerging stocks are up near one month highs, thanks to Asian tech and the promise of Chinese stimulus. The yuan has bounced a quarter percent off one-year lows hit yesterday after authorities pledged company tax cuts.

The lira has bounced after a 3% fall triggered by the central bank’s decision to keep interest rates on hold instead of raising them. The wide ranging selloff in Turkish assets is likely to resume however at the slightest hint of a worsening global backdrop.