Without the US around to sour the mood, the European indices romped ahead on Monday, with the FTSE right at the front of the pack.
Boris Johnson’s determination to renege on the protocols agreed for Northern Ireland in January’s withdrawal agreement, ahead of a fast-approaching deadline in October, caused no-deal Brexit fears to tank the pound, undoing a good chunk of the growth the currency managed across August.
For the last few weeks and months sterling has been able to ignore Brexit, the fire alarm of a no-deal Brexit, growing louder and louder after every bridge burned during the failed UK-EU talks, drowned out by the pandemic.
Smelling smoke, the pound has now opened the oven and found a charred deal no longer fit for consumption – a betrayal of what was promised by the Tories during last year’s election. The currency reacted accordingly, sinking 0.7% against the euro and 0.8% against the dollar, leaving cable at its worst price in close to a fortnight with plenty more room to fall.
Already celebrating a 17-month high Chinese exports reading – and what that indicates for the global economy – the FTSE got high on the fumes of the pound’s demise, surging 2.5% back to 5935.
The Eurozone indices were no slouches themselves, even when factoring in the euro’s gains against the pound. That Chinese export news helped, and the absence of the US, helped erase some of the bearish sentiment that arose at the end of last week, pushing the DAX and CAC up 2.3% and 2.2% respectively.
Now Europe needs to hope that the Dow Jones et al. are feeling similarly perky when they return from their Labor Day weekend break tomorrow.
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