EU agreement weakens stocks

  • The EU’s reprieve for Britain, that is – leave until May 22 if you still mean to – has done little for the FTSE this morning. The index is trading almost 0.8% lower, in sharp contrast with the US and Asian markets, both of which had a good day of trading that concluded with a positive close.

  • Retailers and house builders are performing well but not enough to stem the malaise in a range of other sectors. A spike in sterling’s exchange rate against the euro didn’t help but was not the dominant factor.

  • Apart from Brexit another headwind for European markets are fresh concerns that the upcoming Sino-US trade discussion will make less progress than initially hoped and that the current tariff system will remain in place for a significant amount of time.

Sterling recovers

  • Sterling gained 73 pips against the euro after the EU granted Britain a stingy reprieve before article 50 is triggered. The currency spiked at one point to EUR1.16 before nudging slightly lower but did not make a dent against the dollar, trading only marginally weaker against the US currency. Still, as Britain’s course remains undecided both stocks and currencies stay at the mercy of Westminster headlines.

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