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Sterling jumps on report of Brexit progress, US stocks rally again
NEW YORK, Nov 2, 2018 (BSS/AFP) – The British pound rallied Thursday on
reports of a post-Brexit financial services deal, while US stocks advanced
for a third day in a row, helped by new optimism over US-China trade
relations.
Analysts pointed to a report in The Times of London that British Prime
Minister Theresa May had reached a deal with Brussels to allow British
financial companies continued access to the European market after Brexit.
Sterling surged to $1.3004, up 1.9 percent from the prior session.
British officials and the EU’s chief Brexit negotiator Michel Barnier both
later said agreement had not yet been reached on UK financial services
retaining access to European Union markets after Brexit.
Barnier called the report misleading while British officials said good
progress was being made although a deal had not been agreed.
But market analyst David Madden at CMC Markets UK said “the fact that (UK
officials) didn’t completely dismiss the report suggests there is some truth
to the article.”
“Finance is the lifeblood of the UK economy and any barriers towards
facilitating transactions with the continent would likely deal a deathblow to
UK GDP,” said Boris Schlossberg of BK Asset Management.
Gains by sterling were unaffected by the Bank of England’s decision, as
expected, to keep its key interest rate at 0.75 percent, as well as trimming
its growth forecast for next year when Britain exits the European Union.
– Wall Street rallies –
Europe’s stock markets ended the day mixed, with London’s FTSE 100 dragged
lower as oil stocks fell along with the price of crude.
However the rally in the US continued unabated, with the Dow finishing up
1.1 percent.
US stocks were in the green most of the day, picking up momentum after US
President Donald Trump reported on Twitter after a discussion with Chinese
President Xi Jinping that talks were “moving along nicely” over a trade fight
that has upset investors.
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While investors are likely to take Trump’s comment with a grain of salt so
soon to next week’s congressional elections, the statement was still
encouraging, said Maris Ogg, president at Tower Bridge Advisors.
“We’ve learned in the last year that tariffs are probably not a strategy
but a tactic,” Ogg said. “So the market gets a little encouraged when it
seems there might be some light at the end of the tunnel.”
Ogg also cited “momentum carryover” after positive sessions the prior two
days helped the market to correct an “oversold” situation.
Most Asian stock markets grinded higher Thursday, tracking Wall Street
gains from the previous day and a Chinese pledge to support the world’s
number two economy.
The healthy gains to kick off November come as dealers look to put behind
them one of the worst months in recent years, which saw trillions wiped from
valuations and confidence battered in October.
– Key figures around 2100 GMT –
Pound/dollar: UP at $1.3004 from $1.2766 at 2100 GMT on Wednesday
Euro/dollar: UP at $1.1407 from $1.1312
Dollar/yen: DOWN at 112.62 yen from 112.94 yen
New York – Dow: UP 1.1 percent at 25,380.74 (close)
New York – S&P 500: UP 1.1 percent at 2,740.37 (close)
New York – Nasdaq: UP 1.8 percent at 7,434.06 (close)
London – FTSE 100: DOWN 0.2 percent at 7,114.66 (close)
Frankfurt – DAX 30: UP 0.2 percent at 11,468.54 (close)
Paris – CAC 40: DOWN 0.2 percent at 5,085.78 (close)
EURO STOXX 50: UP 0.2 percent at 3,204.21 (close)
Tokyo – Nikkei 225: DOWN 1.1 percent at 21,687.65 (close)
Hong Kong – Hang Seng: UP 1.8 percent at 25,416.00 (close)
Shanghai – Composite: UP 0.1 percent at 2,606.24 (close)
Oil – Brent Crude: DOWN $2.15 at $72.89 per barrel
Oil – West Texas Intermediate: DOWN $1.62 at $63.69 per barrel
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