Spreadex Market Update

Ross-inspired trade deal ‘phase one’ optimism drives Dow Jones to record high



Building on the momentum seen at the open, the hopes that ‘phase one’ of the US-China trade deal will be signed soon(ish) pushed the markets to a bevy of month/year/decade/all-time highs on Monday.

US commerce secretary Wilbur Ross, though not part of the actual negotiating team, lit a fire under the markets with his optimistic comments regarding the likelihood of Presidents Trump and Xi putting pen to paper in the coming weeks. He also said that licenses for US firms to restart selling components to Huawei would also be arriving sharpish.

Despite optimism not being the same as action, it was enough for the markets to glom onto. The Dow Jones, knocked oh-so-slightly by a bad factory orders reading, added 160 points, striking 27500 for the first time in its storied history.

This unlocked further growth for the European indices. The CAC hit a 12-year high of 5800, while the DAX shot to 13150, a level last seen in mid-June 2018. As for the FTSE, a 1.4% rise lifted it within touching distance of 7400, resuming the recovery of its October-opening losses that stalled last week. Another 50 or so points and it’ll be back where it was before that bloodbath.

Since the UK general election was announced, sterling has been remarkably stoic – in fact, it actually began to rise once the vote was confirmed, despite the losses it kept suffering when one was mentioned previously. Well, inevitably, some jitters began to appear on Monday, the pound dropping 0.3% against the dollar and 0.2% against the euro. It could be a long month and a half for the currency...

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