Letter From Italy

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Market movers today

With no big data in the calendar today, markets will continue to focus on Italy, Brexit and the coming ECB meeting on Thursday, see preview .

Today around noon, the Italian government is expected to respond to the EU letter last week in which the European Commission called the breach of the budgetary rules ‘ unprecedented in the history’ of the European Union, see Reuters . We expect to see some relief in Italian markets today after the EU Commissioner Pierre Moscovici said ‘ that the EU wouldn’t interfere in the new government ‘ economic policies ‘. Although Moody’s downgraded Italian debt one notch on Friday to Baa3, it set the outlook assessment on ‘stable’, which eased the fears of Italy being downgraded to junk. For more on Italy, see also Harr’s View , 21 October 2018.

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On Brexit, today Prime Minister Theresa May is set to outline progress in the talks to the Parliament. According to remarks emailed by her office, she will say that ‘95% of the Withdrawal Agreement and its protocols are now settled’.

Later this week, focus turns to euro Flash PMI (Wednesday), the ECB meeting (Thursday) and the first US estimate for GDP in Q3 (Friday)

In the Nordics this week, the key events will be the Riksbank meeting (Wednesday), as well as projections from the Swedish Debt Office (Thursday) and the Norges bank meeting (Thursday).

For more details on the coming events, see Weekly Focus , 19 October 2018.

Selected market news

Chinese stock markets rallied sharply overnight with the composite CSI300 index up more than 4%. It comes after regulators and leading officials last week highlighted support to the market and speculation of intervention by the so-called ‘National Team’ of state-backed funds. China’s President Xi Jinping over the weekend also highlighted the role of the private sector in an open letter published on state media Xinhua , see SCMP story. ‘ Any words or acts to negate or weaken private economy are wrong ,’ Xi wrote. ‘ It is always a policy of the Central Committee of the Communist Party to support private business development, and this will be unwavering ,’ he said further. The comments come on the back of concerns that the Chinese leadership is heading in the direction of ‘more state and less market’ as a response to the trade war.

US stock futures are slightly higher in Asian trading on the back of the positive sentiment in other markets.
 
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