Brexit negotiations have come back to the fore and dominated the headlines of late as Theresa May looks to secure a deal with the EU. The PM has told Cabinet members that the withdrawal treaty is 95% complete but the remaining 5%, which presumably represents the Irish backstop agreement still pose a sizable challenge. The latest reports suggest that the PM will seek more time from Brussels to strike a deal with Cabinet members with May said to want to keep hopes of a deal this month alive. The pound moved up to a 3-week high yesterday, just shy of the $1.32 handle and while it has pulled back today it appears that investors remain hopeful that a deal can be reached in the not too distant future which would provide a boost to sterling.
It seems like the government are keen to keep the positive news flow going but the truth of the matter is that both sides remain apart on the issue of an Irish backstop and seem unwilling to compromise. The Irish Foreign Minister Simon Coveney, expressed this by urging caution that people don’t get carried away and clearly stated that it is a mistake to assume that if the British cabinet agrees to something then everything is agreed - no doubt referring to the backstop issue.
US stocks record large post-election gains
Stock benchmarks around the globe rallied on Wednesday with the S&P500 posting its second best single day rally following a midterm election in history. A gain of 2.1% meant that only the rise seen back in 1982 was larger and while it is not unusual for the market to respond positively as the uncertainty is lifted after these events, the gains were far bigger than the 0.7% average. President Trump’s reaction to the election was odd to say the least, first by declaring it a victory despite his Republican party losing their majority in the House, and secondly by dismissing his Attorney General before even all the results were counted.
The decision to ask for Jeff Sessions resignation has sparked speculation that the President is looking to protect himself from a likely ramping up of the Russian probe when the new Democratic House majority gathers in January. Sessions’ departure means Matthew Whitaker, who was his chief of staff, will be the temporary replacement and the new Attorney General is believed to be more obstructive to the investigation, having previously shared an article on Twitter titled: “Note to Trump’s lawyer: Do not co-operate with Mueller lynch mob”. An interesting aside from the news was a sharp move higher in Cannabis stocks, with Sessions seen as one of the arch proponents against the legalisation of Marijuana.