While China helped inspire some serious growth in the US and Europe joined by sterling’s Brexit-related losses.
News that the People’s Bank of China would be slashing its reserve requirement ratio by a further 50 basis points, following on from 3 cuts in 2019, gave the markets a New Year’s lift. That, and the announcement that the US-China trade deal would be officially signed on January 15th (though that may only speed-up investors’ questions over ‘phase two’ and beyond...)
The FTSE crossed 7600 after rising 0.8%, while the Dow Jones lurked at 28650 as it climbed 75 points. The real blockbuster growth was saved for the Eurozone, where the DAX and CAC surged 2.4% and 1.3% respectively; that left the German index at a near-2-year peak of 13400, with the French bourse grazing 6050.
Missing out on a 2020 bounce was the pound, which sank 0.6% against the dollar and 0.3% against the euro. This as investors digest the prospect of another year blighted by Brexit uncertainty. For while the UK will be leaving the EU on January 31st, the hard, more contentious, really important work is only just about to begin, as the two sides try to hash out their future trading relationship. A negotiation that has the deadline of December 31st – at least, that’s what Boris Johnson is chasing.
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