Markets mixed
Following a decline in shares due to weak corporate earnings and growth worries, European markets are opening in the green, supported by banks and technology sectors. At market opening, the UK FTSE 100 index (-9.15% year-to-date) is trading up 0.36%, Germany’s DAX and Spain’s IBEX 35 have risen 0.47% and 0.40% respectively, with the Euro STOXX 50 ahead by 0.38%. Asian shares are trading in the opposite direction, with Chinese shares declining amid worries of a growth slowdown and pessimism from analysts about improvement in equities and a breakthrough in the trade war at the G20 meeting. Both Hong Kong’s Hang Seng and the blue-chip CSI 300 ended the week at -0.35% and -2.21% respectively. Japan’s Nikkei and Australian ASX 200 closed at +0.65% and +0.44 respectively.
Sterling rebounds to decline
The pound rose by 0.77% following yesterday’s announcement of a Brexit deal, but there is a long road yet ahead to ratification. The 27 European Union member states will vote on Sunday 25 November: a yes is expected, even though Spain is threatening to veto over Gibraltar. Critically, the final word remains in the hand of the UK Parliament, which will take the final decision sometime thereafter. Accordingly, we expect GBP/USD to decline slightly, approaching the 1.2790 range. The Political Declaration, approved yesterday, remains a political, and not a legal-binding document, thus it does not engage either the UK or the EU to any engagement in the future. The document gives some hints towards the areas where both counterparts will have to work on following the divorce.
