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Brexit might overshadow earnings as the biggest risk to markets Tuesday

2019-01-15 09:49:16       source:CNBC

January 14, 2019

Prime Minister Theresa May's Brexit plan is widely expected to fail in parliament Tuesday, but the defeat could still trigger a violent market reaction.

"We could see knee-jerk volatility. She could lose by a historic margin. This could be a historic loss by the government," said Marc Chandler, Bannockburn Global Forex chief market strategist. Chandler said the U.K. government has only ever had three votes go down in parliament by more than 100 votes, and this could be a fourth.

U.S. strategists are watching the vote closely, and the outcome could be announced sometime in the afternoon east coast time. If the vote fails, May then has three days to come up with an alternative way to move forward to separate the U.K. from the European Union. She would also be at risk of a no-confidence vote, and parliament could seize the process of forming a Brexit plan.

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