Ahead of Tuesday’s first head-to-head TV debate between Boris Johnson and Jeremy Corbyn, the pound shot higher on Monday as the weekend’s opinion polls showed the Tories with a 15%-plus lead.
Reading a Conservative majority as the best outcome thanks to the relative clarity of where it leaves Brexit – alongside the general right-wing leanings of the market – cable climbed 0.4%, opening just shy of $1.295 for the first time in nearly a month. Against the euro, meanwhile, a 0.3% increase pushed sterling past €1.1706, a level last seen at the start of May.
Those gains meant the FTSE was unable to do much after the bell, straining its neck to keep above 7300 with a 0.1% rise. Not that its Eurozone peers were particularly energetic – the DAX added 0.1% to remain in the middle of the 13200 to 13300 trading band it has been stuck in for the last fortnight, while the CAC actually slipped 0.1% to sit at 5925.
Looking ahead to this afternoon and, though the Dow Jones is set to echo the sluggishness of its European counterparts, a 0.2% increase would be enough to send it above 28050 for the first time in its history. The latest news on the US-China trade deal – basically the only thing that really matters to the American markets for the rest of 2019, unless Trump’s impeachment significantly heats up – is that ‘constructive discussions’ were had over the phone on Saturday morning about each other’s ‘core concerns’.
It is yet another example of optimism-without- concrete action, the kind that arguably places the Dow in something of a dangerous position. The index is seemingly working on the assumption that ‘phase one’ of the agreement will eventually be signed. And though the signals would suggest that should happen, with someone as irascible and capricious as Donald Trump, there is every reason to harbour some substantial doubts.
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