Bitcoin nears $10k. Brexit Impasse!

by 27 Nov, 2017


Stock Markets
European indices are generally higher today except for Germany’s DAX30. The index struggled against its peers at the open, but has managed to hold firm and erase early losses off the back of news that Angela Merkel’s CDU party will be pursuing a ‘grand coalition’ with the Social Democrat party, led by Martin Schulz.

This news will relieve many investors in European equities who may have worried that Germany would be stuck in political deadlock for even longer than expected, or that Angela Merkel would have to leave office, a move that would almost certainly weaken the Euro and German stocks.

Spanish stocks had a strong showing too today, with the IBEX35 index having the best performance across the region.

Asian markets were generally bearish today with the SSE Shanghai Composite falling and the TOPIX dropping. The NIFTY was up at an intra-day high of 10,404.65 but slipped slightly at the close. It has still not managed to get back to its peak of 10,452 points in early November.

Elsewhere in India, Prime Minister Narendra Modi is making a series of appearances at public rallies across the country today to drum up support across his home state of Gujarat, which will go to the polls in December in what will be a key test for India’s leader.

Bitcoin hit over $9700 earlier, putting $10,000 per BTC within range. It was only in mid-October when we wrote that the crypto had smashed the $5000 barrier, a price which now looks rather tame in comparison!

On the one hand, analysts are extremely skeptical of an asset class that gains this much value this quickly, but on the other hand, more and more private funds and investment groups are buying into digital currencies or providing their clients the option to trade them.

As we wrote earlier this month, CME Group is launching a BTC futures product on their exchanges in December, so even if this is a major bubble which is set to burst, BTC is still considered a legitimate investment vehicle for the time being, especially as it is now being embraced and institutionalized by major banks and exchanges.

The Indian Rupee managed to hold on to its gains against the Dollar as sentiment remained upbeat due to Moody’s upgrading India’s credit rating last week. The Euro is trading higher against the Dollar, Pound, Swiss Franc and Danish Krone.

Metals prices rose today while Brent Crude fell, as investors looked ahead to Thursday’s OPEC meeting. They will be hoping that OPEC countries agree to extend production cuts once again.

Brexit Impasse

It was made clear by the European Union earlier this month that trade talks between Britain and the EU could not begin before 2 key criteria were sorted out.

The first was that the final ‘Brexit bill’ would be mutually agreed upon between the two negotiating teams, while they would also have to agree on a plan to avoid a ‘hard border’ in Northern Ireland after the UK leaves the bloc.

However, UK Trade Minister Liam Fox (pictured) has taken an opposing view. Fox has been accused of ‘holding Ireland to ransom’ after he said over the weekend that there cannot be a solution to the problem of Northern Ireland’s borders until trade talks happen between the EU and UK.

Speaking to Sky News, Fox said: “We don’t want there to be a hard border but the UK is going to be leaving the customs union and the single market.” He added, “And until we get into discussions with the European Union on the end state, that will be very difficult so the quicker we can do that the better – and we are still in the position where the EU doesn’t want to do that.”

Euro-sceptic factions within Parliament have repeatedly said the UK does not owe the EU anywhere near the much touted Brexit bill figure. In August, prominent ‘Leave’ campaigner Jacob Rees-Mogg said “Legally we owe nothing.”

The leader of Ireland Leo Varadkar has said he wants a written guarantee from UK PM Theresa May that there will be no hard border after Brexit, but EU officials are allegedly not optimistic that this can be achieved. Pro-Brexit MP’s in the UK have called for Ireland and the EU to come to their senses over the issue as a return to a hard border is not in the interests of the EU, UK or the Republic of Ireland.

The comments from the Trade Minister are likely to stir up even more bad blood between the European Union and UK, amidst a shaky process of negotiations since the country voted to leave the EU in June 2016.

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