Market News & Analysis
Trade deal enthusiasm sends stocks higher
Fiona Cincotta March 4, 2019 4:22 PM
The FTSE led the charge in Europe, climbing higher than its European counterparts’ thanks in part to the weaker pound.
Pound drops as construction sector slips into contraction
Despite a strong start for the pound, dismal construction sector data and a strengthening dollar, saw cable drop below $1.32. The UK construction sector slipped into contraction in March, dropping to 49.5. This is the weakest reading for the sector since March last year. Brexit uncertainty slowing business decisions, holding up investment and builders unable to get the materials required amid increased stockpiling are hitting the sector. The pound dropped lower on the release, falling below $1.32. It is currently encountering resistance at $1.3180, a meaningful break through this level could open the doors to $1.3160.
With manufacturing and construction showing the impacts of Brexit, traders will look towards the service sector pmi tomorrow. The dominant service sector grinded to a halt in January and the expectation is that February wasn’t much different. Given broad weakness across all sectors of the UK economy, it is difficult to see how the Britain will avoid a contraction in the first quarter.
Dollar shrugs off Trump’s comments
Dollar was resilient on Monday, moving higher versus the pound and the euro as traders shrugged off Trump’s efforts to talk down the dollar. As trade talk optimism boosted treasury yields, the dollar followed suit.
Euro struggles ahead of ECB announcement
The euro was a noticeable decliner on Monday as investors look ahead to the ECB rate announcement later this week. Speculation of further monetary easing for the region is dampening demand for the euro. There is a good chance that investors are getting ahead of themselves here. A decision to this effect would be admitting that the end of QE in December was in fact a mistake.
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