The Post-Brexit Trade Deal Has Some Notable Gaps

Plenty of political spin has already been applied to the post-Brexit UK-EU trade and cooperation agreement. This not only glosses over much of the detail, but it can also be decidedly misleading. For example, Boris Johnson, the UK prime minister, has claimed that “there will be no non-tariff barriers to trade”. This is not the case.

A “job done, let’s move on” attitude generally ignores the practical implications of what has been agreed. That said, both the EU and the UK government have published some useful explainers.

The deal, negotiated at remarkable speed, delivers zero-tariff, zero-quota goods trade between the UK and the EU. It also covers matters such as data, energy, transport, movement of people, law and justice, fisheries and UK access to EU programmes.

Much will change when when the UK’s withdrawal from the EU fully takes effect on January 1 2021. It will leave the customs union and various cooperation programmes and the free movement of goods, services, capital and people will stop. What the trade and cooperation agreement does is establish a relationship in which some of the resulting disruption to trade and the movement of people between the UK and the EU is mitigated by new terms of engagement.

Disruptions there will be, however. The deal does not, for example, remove many of the additional frictions on the movement of goods between Great Britain and Northern Ireland. Prohibitions and restrictions on the movement of processed meats will still apply from July 1 2021.

The Brexit negotiators have achieved something very significant in agreeing zero-tariff, zero-quota trade for all goods. This is unprecedented given that it includes agricultural products. However, it cannot hide the fact that the UK will no longer be part of either the EU customs territory or, more importantly, its internal market. New customs formalities and regulatory checks, for example, will need to be completed for the movement of goods between much of the UK and the EU. The exception is Northern Ireland, which remains, in effect, part of the EU customs territory and its internal market for goods.

The movement of capital, services and people between the UK and the EU will no longer be as free as it has been for much of the past 30 years. The deal contains commitments on market access for services but there will be multiple exceptions to what can be traded and how – and so restrictions. On the movement of people, holiday travel and certain short-term business trips between the UK and the EU will be visa-free, but, again, in many instances there will be new restrictions.

Areas of cooperation

The UK and the EU have agreed that there will be various areas of continued cooperation, but not in all areas and certainly not to the same extent as when the UK was an EU member state. Indeed, although the UK will continue to participate in the EU’s Horizon research programme and access its satellite surveillance and tracking services, it will no longer be involved, for example, in the Erasmus programme, which supports students and academics in exchange programmes with institutions across the EU. The UK is launching its own “Turing” programme but there are concerns that it is underestimating the challenges in getting an alternative to Erasmus participation up an running for September 2021. Students in Northern Ireland look set to get access to Erasmus via support from the Irish government.

There will be cooperation on policing and judicial matters, for example through UK engagement with Europol and Eurojust, but nothing has been agreed on foreign, security and defence policy cooperation, despite both sides flagging this as needing agreement in a political declaration accompanying the withdrawal agreement.

As the European Commission stated, the deal “sets a solid basis for a mutually beneficial and balanced partnership”. What has been agreed is essentially only a framework for a new period in relations. The actual relationship will be determined through ongoing dialogue and negotiation, further decisions and agreements, tensions and probably disputes. What’s more, after five years there may be a review and a “rebalancing” of the rights and obligations contained in the agreement.

Northern Ireland

The deal contains no changes for the arrangements already made on how to manage the Irish border after Brexit. There are though a few additional lines on road haulage on the island of Ireland and specific provisions for cross-border road passenger journeys.

As planned, therefore, Northern Ireland will be treated differently from the rest of the UK to avoid a physical hardening of the border on the island of Ireland – although some is inevitable. Wider UK-EU arrangements for services, fish, and police and judicial cooperation will help but, when the transition period ends, the disruption will be significant for many existing arrangements beyond essentially the free movement of goods.

A key reason for this special treatment is that, without it, the arrangements agreed by both sides simply would not be possible without a hardening of the border. This is a reflection of how thin the agreement is and points to the fact that even with the zero-tariff, zero-quota trade, the new UK-EU relationship is one that will involve new barriers to trade. The days of the free movement of goods, services, capital and people between the UK and the EU are in the past.

David Phinnemore, Professor of European Politics, Queen’s University Belfast

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Image: Reuters

Source link

Dow Jones Futures Signal Stock Market Rally; Tesla, Nio, Xpeng, Moderna, Zoom Are Notable Movers

Dow Jones futures jumped Tuesday morning, along with S&P 500 futures and Nasdaq futures, on continued coronavirus vaccine optimism and strong China manufacturing data. Apple (AAPL), Tesla (TSLA), Nio, Xpeng Motors and Moderna stock were rallying before the open, while Zoom Video Communications (ZM) retreated.


The stock market rally lost ground Monday but came off lows, especially the Nasdaq, fueled by gains in Apple (AAPL), Moderna (MRNA) and AMD stock. In Monday’s session, Apple stock flashed an early buy signal, while Advanced Micro Devices (AMD) broke out. Apple chipmaker Qorvo (QRVO) also cleared a buy point.

Tesla, Nio Early Movers

The S&P 500 index will add Tesla stock in one fell swoop before Dec. 21, S&P Dow Jones Indices announced late Monday. Meanwhile, China rivals Nio (NIO) and Xpeng Motors (XPEV) reported November deliveries early Tuesday. Moderna just kept soaring.

On the downside, Zoom Video, the ultimate coronavirus play, reported better-than-expected results and upside guidance. But Zoom Video stock fell solidly before the open

Tesla and Zoom Video stock are two of the biggest 2020 winners, up 578% and 603%, respectively as of Monday’s close. But MRNA stock is 681% year to to date. Nio stock is up a 1,157% so far in 2020. Recent IPO Xpeng stock is up just 291%, though it tripled in November alone.

Apple stock, the ultimate megacap, rose before the open after closing right at an aggressive entry.

On Monday, Chinese stocks struggled on a variety of factors, including a looming House vote on legislation that could lead to delistings from U.S. markets. Fraud allegations vs. EV maker Kandi Technologies (KNDI) didn’t help. E-commerce giants (JD), Pinduoduo (PDD) and Alibaba (BABA) suffered significant losses. Tesla electric car rivals Nio, Xpeng and Li Auto (LI) also retreated. stock, Pinduoduo, AMD and Tesla are on IBD Leaderboard. Apple stock is on the Leaderboard watchlist. AMD and Tesla stock are on SwingTrader. AMD stock is on the IBD 50.

Dow Jones Futures Today

Dow Jones futures rose 1.15% vs. fair value. S&P 500 futures climbed 1.1%. Nasdaq 100 futures advanced 1%. Apple stock gave a lift to the Dow Jones, S&P 500 and Nasdaq.

Caixin’s China manufacturing index rose 1.3 points in November to 54.9, the highest in 10 years. That comes a day after the official China manufacturing gauge hit a three-year high.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live.

Coronavirus News

Coronavirus cases worldwide reached 63.70 million. Covid-19 deaths topped 1.47 million.

Coronavirus cases in the U.S. have hit 13.92 million, with deaths above 274,000.

The Moderna coronavirus vaccine is 94.1% effective, the biotech said early Monday. Notably, it’s 100% effective in preventing serious Covid-19 cases. Moderna (MRNA) filed for FDA approval, a few days after Pfizer (PFE)] and BioNTech (BNTX) filed with the FDA for their 95%-effective coronavirus vaccine.

Moderna stock spiked 20% Monday, capping a 126% explosion in November. MRNA stock kept soaring, tacking on 10% early Tuesday.

Stock Market Rally

U.S. Stock Market Today Overview

IndexSymbolPriceGain/Loss% Change
Dow Jones(0DJIA)29643.97-266.40-0.89
S&P 500(0S&P5)3621.82-16.53-0.45
Nasdaq(0NDQC )12198.74-7.11-0.06
Russell 2000 (IWM)181.30-3.07-1.67
IBD 50 (FFTY)39.50+0.18+0.46
Last Update: 4:22 PM ET 11/30/2020

The stock market rally had a down day, but the Nasdaq was resilient while leading stocks did well overall.

The Dow Jones Industrial Average lost 0.9% in Monday’s stock market trading. The S&P 500 index sank 0.5%. The Nasdaq composite lost just a fraction, after falling more than 1% intraday.

For the month, the Dow Jones soared 11.9%, the S&P 500 10.8% and the Nasdaq 11.8%.

Some highflying IPOs came under pressure Monday, though they generally closed with modest losses or even reversed higher.

Growth stocks overall fared well. Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 0.5%. The iShares Expanded Tech-Software Sector ETF (IGV) climbed 0.45%. The VanEck Vectors Semiconductor ETF (SMH) popped 1.1%, with AMD stock a notable contributor.

Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.

Zoom Video Earnings

Zoom Video earnings shot up 1,000% to 99 cents a share, with revenue up 366.5% to $777.19 million. Analysts expected Zoom Video earnings of 76 cents on revenue of $693.4 million.

The videoconferencing leader guided higher for Q4 and for 2021.

However, Zoom Video stock fell 7% in premarket action. Shares rose 1.4% to 478.36 on Monday, reclaiming the 50-day line.

AMD Stock

AMD stock jumped 6.3% to 92.66 in heavy volume Monday, blasting above an 88.82 buy point from a double-bottom base. CEO Lisa Su said during a Credit Suisse conference on Monday that AMD sees Q1 sales trending “a little bit better” than normal seasonality, suggesting some upside.

Qorvo Stock

Qorvo stock rose 4.4% to 156.68, clearing the 154.53 buy point from a three-weeks-tight pattern. The chipmaker is benefiting from momentum in 5G wireless, including the new Apple iPhone. Qorvo was an IBD Stock Of The Day last week.

Qualcomm (QCOM), another 5G and Apple chipmaker, rose 2.3% to 147.17, working on a four-weeks-tight entry with an official buy point of 153.43, according to MarketSmith analysis. Qualcomm stock was Monday’s Stock Of The Day.

Apple Stock

Giving a boost to Qualcomm and Qorvo stock, Apple stock rose 2.1% to 119.05, though it backed off an intraday high of 120.97.

Loop Capital upgraded Apple to a buy with a 131 price target, expecting upside to iPhone sales and other products and services. Morgan Stanley tapped the iPhone maker as a strong 5G play.

Shares are rebounding from their 50-day moving average. The official buy point is 138.08, with early entries of 125.49 and 122.09. Apple stock did cross a trend line starting from the Oct. 13 high, essentially closing right on that line.

An aggressive investor could start an AAPL stock position here, then perhaps add more shares as it clears the 122.09 and 125.49 levels and finally the 138.08 buy point.

Apple stock has slightly lagged the broader market for the past few months. If the tech giant can wake up, it would add real momentum to the major indexes.

Apple stock rose 2% before the open.

Tesla Stock Jumps On S&P 500 Update

Tesla stock rose 5% overnight on the S&P Dow Jones Indices’ decision to add the EV maker to the S&P 500 index in one go. Because of Tesla’s huge market cap, the committee had mulled splitting the stock’s entry into two tranches.

Tesla stock has skyrocketed since the announcement that Tesla will join the S&P 500 before the open on Dec. 21.

Meanwhile, Tesla got China’s official green light on Monday to sell the Model Y from its Shanghai plant, as expected.

Tesla stock briefly rose to a new high of 607.80 soon after Monday’s open before reversing for a 3.1% decline to 567.30.

Nio, Xpeng Deliveries

Nio delivered 5,291 electric vehicles in November, up 109% vs. a year earlier. That includes 2,386 ES6s, 1,387 ES8s and 1,518 EC6s. The recently launched EC6 crossover will compete with the Tesla Model Y when that launches.

Xpeng delivered 4,224 electric vehicles, up 342% vs. a year earlier. That includes 2,732 P7 sedans, which competes with the Tesla Model 3. Xpeng also sold 1,492 G3s, its small SUV.

Li Auto will likely release November delivery figures in the next few days.

Goldman Sachs raised its price targets on Nio and Li Auto stock for good measure.

Overall China EV production and sales, including Tesla figures will probably come next week.

Nio stock rose 3% early Tuesday. Xpeng rallied 7% and Li Auto stock 10%.

On Monday, Nio sank 6.4% while Li Auto and Xpeng stock lost nearly 9% on a bad day for U.S.-listed Chinese stocks.

Kandi Technologies tumbled 28% after short-seller Hindenburg Research accused the Chinese EV maker of fraudulent sales.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.


Why This IBD Tool Simplifies The Search For Top Stocks

Best Growth Stocks To Buy And Watch

IBD Digital: Unlock IBD’s Premium Stock Lists, Tools And Analysis Today

Source link