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Countdown to Brexit negotiations, market risk aversion triggers stock market crash
Source: Financial Association
According to the Financial Associated Press (Shanghai editor Liu Rui), October 15 local time is the original deadline set by the British government for negotiations on a free trade agreement between the UK and the European Union. The deadline set unilaterally by the British government coincides with the EU summit. On October 15 and 16, local time, 27 European leaders met in Brussels. With less than 24 hours before the deadline, the British and European statements have attracted more attention.
Judging from the latest positions published by the UK and Europe, both sides have shown their willingness to continue the negotiations. Judging from the draft EU Summit Communiqué, there is a high probability that the two sides will continue to negotiate for several weeks.
However, after the European market opened on Thursday, the major stock indices fell sharply overall. Analysts noted that market sentiment may tend to be a safe haven ahead of the trading deadline. Furthermore, multiple factors such as desperate fiscal stimulus from the United States in the general election, the severe epidemic in Europe and the increased level of restrictions by the British government on the new crown epidemic in London have also led to the collapse of European stocks. .
The European Stoxx 50 Index fell sharply on Thursday
UK: attitude has softened
In a speech last month, British Prime Minister Johnson said that in the absence of an agreement on the new trade deal by October 15, the two sides “should accept and move on.” He believes that if no agreement is reached, the UK and the European Union should be prepared to start trading raw materials under the World Trade Organization rules from January 2021. Compared to a formal agreement, This may mean that exporters on both sides will face higher costs and barriers.
However, on Wednesday night, Boris Johnson’s attitude suddenly softened. He said in a phone call with the president of the European Commission and the president of the European Council that he will wait for EU leaders to conclude the summit discussion on Friday before deciding what the UK will do next.
Due to Johnson’s weakness, the pound once rose nearly 150 basis points in the short term.
A senior EU summit official told the media: “Boris Johnson always sets a deadline over and over again, and then delays it.”
EU: Negotiations will continue for several weeks
On the EU side, negotiations are expected to continue in the coming weeks rather than ending negotiations within this week.
Irish Foreign Minister Simon Coveney (Simon Coveney) said after meeting with his European counterparts on Tuesday: “I don’t think there will be a breakthrough this week.”
The draft EU summit communiqué shows that the EU will no longer ask the EU’s chief negotiator, Barnier, to “strengthen” the negotiations with the UK, but that “negotiations may continue in the coming weeks.”
It should be noted that the bill also listed “level playing field, governance and fisheries” as unresolved issues in the negotiations, adding new wording to the results of the lack of agreement: “EU leaders ask the European Commission to consider in a timely manner unilateral and time-bound emergency measures that benefit the EU in the context of trade agreements. “
Some market commentators believe that in view of the fact that the UK has already issued some signals that it is ready for further negotiations after this week, the EU action looks more like a “fake gesture”.
A German government official said that to avoid being blamed, the EU must continue negotiations as long as possible. He added: “The EU will not leave the negotiating table.”
The EU stated that the deal must be reached by early November at the latest to allow time for approval by its parliament and some national parliaments. British Commerce Secretary Nadhim Zahawi said London cannot wait too long, because if negotiations fail, it must tell companies to prepare.
Goldman Sachs: Or reach a “simplified” Brexit deal first
Goldman Sachs said Thursday that there may be dramatic Brexit events at the EU summit, but a simplified trade deal is likely to be reached in early November.
“Neither the October 15 deadline set by the British Prime Minister nor the October 31 deadline set by the European Commission will represent a serious obstacle to Brexit negotiations,” said Goldman Sachs analyst Sven Jari Stehn, “This week, the European Council may represent an additional political drama.”
“We believe that the expectation of a no-deal Brexit will continue until the end of October. But our main view is that a zero-fee / zero-quota trade deal can be reached in early November.”
Sina Statement: Sina.com publishes this article for the purpose of conveying more information and does not mean that I agree with their views or confirm their description. The content of the article is for reference only and does not constitute investment advice. Investors operate accordingly at their own risk.
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