Putin to Paris; Cameron to Manchester

October 2, 2015

Russia’s Vladimir Putin will meet leaders of France, Germany and Ukraine in Paris this afternoon for talks originally slated to cover Ukraine but now overshadowed by a conflict in Syria pitting Moscow and Washington in combat in the same country for the first time since the Cold War. While they have the same foe, Islamic State, they have different allies and a divergence of views on the end-game. Not for the first time, Western officials are struggling to work out Putin’s motives and come up with a convincing response. A news conference is due after the talks this evening.

Britain’s Conservative Party holds its annual conference in Manchester from Saturday and, as is the tradition, rifts over Europe will dominate. One survey shows 69 of PM David Cameron’s 330 lawmakers have already decided they will vote to leave the EU in the promised referendum; all eyes are on whether high-profile London mayor Boris Johnson will also come out for the “out” campaign. Cameron’s speech will be scrutinised for clues to the timing of the referendum, with some tipping him to call it sooner rather than later in 2016. He may well decide to leave the date open for now pending negotiations with EU capitals on the reforms of the bloc he is seeking.

Today is the final day of campaigning ahead of Sunday’s election in Portugal, a vote largely on whether it should continue along the path of austerity set out by the bail-out programme completed last year. Depending on which poll you read, the centre-right ruling coalition holds a six- to 12-point lead over opposition Socialists but remains shy of a margin sufficient to win an outright majority in parliament.

 

MARKETS (at 0645 GMT)

Stocks are up slightly in Asia and Europe is expected to open higher, following meagre gains on Wall Street. The dollar is up 1-2 percent against the yen and the euro. Hong Kong shares up an eye-catching 2.7 percent as investors cheer new policy moves to help the Chinese economy. However, this is U.S. non-farm payrolls data day and that is likely to be the dominant theme. Economists forecast 203,000 new jobs were created and an unchanged unemployment rate. Depending on whether those expectations are beaten or missed, investors will calibrate their view on when the Fed raises interest rates. U.S. Treasury yields fell in New York and are about flat as European trade kicks off. German 10-year yields, which fell on Thursday on the gloomy global economic outlook, are up less than 0.1 percent. Watching Portuguese yields before Sunday’s election.

Oil prices are up slightly, with traders citing greater political risk from fighting in Syria. Brent is up 69 cents at $48.36 a barrel. Copper is down a shade on worries over Chinese demand but is set for a gain on the week. Gold hit a two-week low before the U.S. jobs data.

Emerging equities rose 0.3 percent on Friday and were on course to end the week up around 1.4 percent, but the outlook remains poor, with investor worries over slower Chinese growth mounting. Russian equities and the Russian rouble retreated after the strikes in Syria. Asian currencies continue to trade at multi-year lows — the Thai baht is at the lowest level in nearly nine years, and Singapore dollar hit a 6-year low.

 

EVENTS

U.S. non-farm payrolls data 1230 GMT, forecast is for 203K jobs created and an unchanged 5.1 pct unemployment rate

Spain jobless

Norway jobless

Euro zone PPI

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