Will Brexit be more painful for Europe rather than for the UK?

September 29, 2016

The risk is increasing on the market ahead OPEC meeting in Algiers and Yellen testimonial, which will happen before the House panel. FED-fueled rally on gold starts to fizzle out as the December futures keep on a losing streak for a second day, finally dipping by  0.12% to 1,328.75.

Yields on defensive Gov. bonds rise while signalling that there could be less risk concern, as, German 10YR tonne yield rose and even the US 10YR treasuries yield went up by 0.58%.  Pound stalls near Tuesdays close against the US Dollar waiting for Yellen’s cues on further FED action, GBP/USD -0.05% at 1,3016. There are also some swinging on the British currency, which was triggered by speculations of the disastrous impact of UK quitting EU.  A recent statement from the head of German media concern “Axel Springer” Matthias Döpfner that Brexit will be more painful for the rest of Europe than for the UK.  The doomsayers’ camp is seeing an immediate blow to the country after the breakup process will officially be triggered.

“In three to five years from now, I believe that England would be in a better position than continental Europe,” said Matthias Döpfner. According to Döpfner Britain is moving towards “free market-oriented model, while Europe step by step turns into a transfer union” in which wealth is distributed from the rich countries to poor ones.  “And it may deter many investors,” – he said in an interview with the FT, published on Tuesday.

JPY gave up some early gains against the American currency as the major went up by 0.20% to 100, 62 level.

The crude prices pare loss after dropping by 3% yesterday, WTI +1.19%, Brent +1.35% as investors are bracing for the outcome of the informal OPEC meeting. The officials said earlier this week that they would unlikely reach a substantial decision about the new market balance. It is better to focus on the data coming in the Novembers meeting in Vienna.

US Durable Goods Orders In August fell -0.4% comparing to the previous month, tallying with expectations.

On the commodity market prices on Nickel halted declines and turned to growth after the Philippines (the largest supplier of nickel ore in the world) suspended the operations for another 20 mines. Due to their non-compliance with environmental requirements. Futures on nickel for delivery in three months rose by 1.6% to $ 10,700 per tonne – the highest since August 12. Previously, the price of the metal dropped 2.8%.

European equities rally together with the emerging market stocks after trading in the red zone on Tuesday; DAX rose 1.02%, FTSE +0.83%, Russian RTS 0.85% to 981,41 expecting hawkish Yellen tone on December rate hike case and positive news from Algiers.

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