City Index | Apr 04, 2019 11:49
The FTSE dipped this morning as ex-dividend trading sucked the life out of banking and insurance shares while lower commodity prices weighed on mining and oil stocks.
Other European gauges are also struggling in negative territory affected by a sharp decline in German factory orders but the decline has been tampered by signals of progress in the US-China trade talks which are about to go into a new three-day round in Washington.
The high-pitch of the Brexit drama continues this morning with MP’s voting by a majority of one in favour of a motion that will require the Prime Minster to ask the EU for an extension of the Brexit deadline. The bill has yet to be approved by the Lords before it goes to Brussels for a final green light on the date.
The euro is being torn in two different directions with a delay in Brexit spelling good news for the common currency but the decline in German factory orders causing serious and more long-term concerns.
The problem Germany’s industry is facing is of a global nature rather than to do with local frictions as by far the biggest slowdown in orders happened outside of the EU. Of course, Brexit only adds to these concerns as the UK is a major buyer of German cars and other goods and equipment.
The European Central Bank has already acknowledged the weaknesses the region will be facing this year but the 4.2% decline in German orders published Thursday may force the bank to do more to prop up the region’s economy.
Italy’s bank UniCredit (LON:0RLS) has expressed an interest to step into the merger fray if the Deutsche Bank (DE:DBKGn) Commerzbank tie-up fails. Commerzbank shares are on the rise this morning following reports that UniCredit is preparing a bid for the bank if the current set of negotiations with Deutsche Bank fails.
European banking regulators are looking on with some scepticism but have not made any moves to prevent the merger. The ball is now in Commerzbank’s court and its board will discuss the options next week.
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Written By: City Index
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