With the pound and euro tanking against the dollar, the European indices were allowed to build on their initial – if still insufficient – gains.
For sterling, the issue is unsurprising. It appears that the currency has been spooked by Theresa May’s impending meeting with the 1922 Committee of Tory backbenchers, with whom the PM hardly has the best relationship with at the moment (even before the rather violent comments reported in the papers over the weekend). The outcome of that address may impact how the Brexit negotiations move forward – or don’t, as the troublesome case may be.
Regardless, the pound tumbled 0.6% against the greenback, sending cable under $1.291 for the first time since the start of September. This allowed the FTSE to expand its Wednesday rebound to half a percent, an increase that sent the UK index back above 7000 (if only just).
As for the eurozone, the single currency’s 0.5% drop against the dollar, inspired by a series of worse than forecast, trade war hit manufacturing and services PMIs, helped the DAX climb 0.3% with the CAC rising half a percent. Not great in light of Tuesday’s losses, but something.
Turning to the US open, and given the relative fragility of the European rebound, the forecast 80 point drop from the Dow Jones could see things shift back into the red as the afternoon progresses.
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