Market Round Up: Brexit Fudge Fix 📈 – Pre Labor Day Anxiety 🎇
1. Brexit Fudge Fix
Post Brexit trading confidence for UK companies took a dive according to a survey released by Lloyds Bank, painting a dark picture for the country’s future when it goes-it-alone next Spring.
Interestingly this mood is in contrast to an expected consensus that consumer confidence is on the up, and rumours from the EU27 leaders that a deal must be done – even it has to be ‘fudged’. What is known as the Chequers plan, although unloved by both sides of the UK political spectrum and the EU negotiators, may just end up being the most realistic compromise. That mainly means pretending the Irish border issue doesn’t exist.
The mood for now is that come October’s European Council meeting a transition agreement will be agreed by the UK and all the other 27 members of the EU whereby the UK stays in the Single Market and customs union – for a while longer! Along with the EU’s chief negotiator Michel Barnier’s positive tone in the past couple of days, this has helped reflect an uptick in Sterling while the FTSE 100 index saw a dip; which is explained by the high number of constituent company member’s high dependency on exports.
2. Labor Day Cheer?
An Oval Office interview brought trade tensions back in to focus when President Trump threatened to pull out of the World Trade Organisation (WTO) and stated that the U.S. had the upper hand in trade disputes with China. To add fuel to the fire, Trump announced plans to impose new tariffs on China as soon as next week, sending markets into a frenzy as geopolitical tensions mounted.
Meanwhile the VIX, a key index of of short term investor mood, rose to a two-week high, while there was the inevitable pre-holiday risk sell-off that was accentuated by Trump’s WTO threat.