With the Dow Jones and its American peers off taking a much-needed Labor Day break, the European markets are all on their own this Monday. Luckily, there has plenty to prevent an aimless start to the week...
First and foremost, the pound, which had such a strong summer against the dollar, tumbled half a percent against greenback and euro alike. This as Brexit came roaring back into the picture over the weekend – specifically fears of a no-deal Brexit, after reports broke that Boris Johnson’s government is preparing to unveil legislation regarding Northern Ireland on Wednesday that will override what is written in January’s withdrawal agreement.
That act of aggression arrived alongside a fresh ultimatum, with Johnson claiming Britain will walk away from the table for good if a deal isn’t reached by October 15th. One final twist of the knife came as Johnson stated no deal was actually a ‘good outcome’.
It is another example of the government actively chasing a no-deal Brexit, despite their pre-election claims of an ‘oven-ready’ agreement, and could pose a serious threat to sterling’s recent gains in the coming weeks.
What that does mean, however, is that the FTSE was free to rebound, adding 1.4% to re-cross 5860. These gains matched the pace of growth seen in the Eurozone, where the DAX and CAC climbed 1.4% and 1.3% respectively.
Investors were feeling slightly more positive following a 9.5% year-on-year jump in Chinese exports in August – the biggest rise in almost a year and a half. Though imports fell 2.1%, the morning’s trade data has been read as a sign of global recovery, as countries around the world start to resume mass purchasing of goods from China.
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