Market News & Analysis
Sterling gets choppy as Commons takes centre stage
Fiona Cincotta September 5, 2019 9:02 AM
It is all about politics in the markets at the moment. As the Boris Johnson government has progressively lost control of the situation, so sterling has rallied. It now looks more likely that a coalition of rebel Conservative MPs and opposition parties will take a no deal Brexit off the table with legislation, which was what the market was hoping for.
The pound climbed from around 1.218 vs the USD last night to hit 1.226 before slumping again in overnight trade. It saw a big tactical sell off from overnight levels down to 1.2215 before starting to stage another rally. This is the sort of volatility in sterling we were expecting in what is a dramatic week in UK politics.
The next obstacle will be whether Labour will rise to Johnson’s challenge of an election in October..
US and China agree to Washington sit down talks
The US and China will be re-starting trade talks next month. There had been very little obvious progress in these talks over the summer months. The decision has been take to hold ministerial-level talks in Washington, which some analysts regard as evidence that both sides are creeping closer to something more substantive.
The news had an immediate impact on Asian markets, with the CSI 300 index of leading Chinese stocks rising 1.8%. Japan’s Topix index was also up more than 2%. Right now both sides are nowhere close to where they were in April, but the US economy is starting to feel the pain from the Chinese tariffs, particularly states with a heavy agricultural bias.
FTSE marginally lower but Melrose surprises
The FTSE has opened slightly down this morning, giving up almost all over yesterday afternoon’s final surge. Melrose Industries was up over 7% following better than expected first half numbers. The company also said it would be raising its dividend by 10%.
Please note these products may not be available to trade in all regions.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.