The political divide in Europe is on stark display, with German Chancellor Angela Merkel receiving applause from her nations parliament as she adamantly declared that the U.K. would not be allowed to retain special privileges if it leaves the European Union. Meanwhile, European Central Bank president Mario Draghi, avoiding Brexit during a speech in Portugal, made a conciliatory call for greater cooperation among global policymakers. As the difficult process of leaving the EU looms, Britains two largest political parties were consumed by infighting, with Labour Party leader Jeremy Corbyn facing a no-confidence vote today and Chancellor of the Exchequer George Osborne, the highest-ranking Conservative besides outgoing Prime Minister David Cameron in the cabinet, announcing he will not seek the top job. Today will also mark the first meeting of Cameron with European Commission President Jean-Claude Juncker and other EU leaders to discuss practicalities of an exit. Cameron, however, has made clear that it will be up to his successor to engineer the actual departure.
Pound rebounds despite downgrades. For the first time since the Brexit vote, the pound sterling rose modestly against most primary currencies. The slight rebound occurred is spite of the announcement by S&P Global Ratings that it was lowering its ranking of U.K. sovereign debt to AA from AAA and Fitch Ratings cut by an equivalent amount, each with a negative outlook.
Liquidity demand surges at the Bank of England. Demand today was more than double the allotted funds on offer for the first liquidity facility offered by the Bank of England since the Brexit referendum. The majority of bids were based on the lowest credit-quality collateral accepted, including mortgage-backed securities. In the immediate wake of the vote, Bank of England governor Mark Carney pledged that the bank would take action required to prevent a lack of liquidity.
Line IPO back on track. After a short delay waiting for Brexit dust to settle in global markets, underwriters for Japanese messaging app developer Line Corp. set the price range for the initial public offering, expecting to raise more than $1 billion with 35 million shares offered in Tokyo and New York. Line originally filed an IPO in 2014 at a richer valuation but held off due to market conditions.
Volkswagen settlement looms. U.S. attorneys and Volkswagen are about to reveal a settlement package worth as much as $15 billion in connection to the German automakers car-emissions scandal in the U.S. The deal is said to include plans to buy back almost 500,000 vehicles and offer an additional payment of between $5,100 and $10,000. At the same time, owners of nearly 3 million affected Volkswagen cars in Europe may go without monetary recourse, sources report.