Despite spending last Friday in a state of anxious anticipation ahead of the weekend’s G7 meeting, the fact the global get-together resulted in a complete breakdown in communication between the US and its ostensible allies, alongside multiple Twitter tirades from a petulant Trump, has had little effect on the markets.
It appears that investors are instead pinning their hopes on Trump’s second big summit in the space of a week: a historic trip to Singapore to meet Kim Jong Un. Optimism, misplaced or otherwise, that the 2 countries could secure some kind of nuclear agreement led to a broadly positive Asian session, and helped the European indices to a strong start on Monday morning.
The FTSE returned to the safety of 7700 after the bell, a 30 point climb taking it back above that landmark level having dipped below it last Friday. The DAX, meanwhile, jumped 70 points to re-cross 12800, with the French CAC up 0.4%, the Spanish IBEX 35 rising 1% and the Italian FTSE MIB charging ahead with a 2.1% surge.
As for the forex markets, the pound tried to escape the clutches of $1.34, rising 0.2% against the dollar to tease $1.344; against the euro it had less luck, the currency slipping 0.2% to duck back under €1.138.
Sterling has a lot to contend with this week, even before the macro-economic stuff is factored in. Monday’s UK manufacturing and industrial production figures – the former forecast to bounce from -0.1% to 0.3% month-on-month, the latter set to remain unchanged at 0.1% – are a soft start, followed by the 1-2-3 hit of Tuesday’s jobs report, Wednesday’s inflation reading and Thursday’s retail sales data.
On top of all that are the latest meetings from the Fed, with Jerome Powell expected to hike rates once again, and the ECB, which could signal the winding down of its stimulus programme (or, at least, signal when it will reveal the end-date). That’s an obstacle strewn path for the pound, one that will make it hard to turn its mild rebound against the dollar into something more substantial, or for it to actually gain any momentum against it’s the euro.
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