Spreadex Market Update

Trade war relief and sterling’s Brexit woes pushes FTSE towards 7850



The FTSE’s gains gathered pace this Monday, with investors starting to cast their gaze towards the heady heights of 8000.

The UK index almost doubled its growth as the day went on, surging 0.9% to cross 7840 for the first time in its history. There are a couple of key macro-motivators for the FTSE’s record-breaking gains. Firstly, and most broadly, there is investors relief at the news that the brewing US/China trade war is ‘on hold’ – well, specifically, the previously announced tariffs have been put on the back burner – after the two countries agreed a framework to reduce America’s deficit with its global sparring partner.

Secondly, and more domestically, is the re-emergence of Brexit as a value-eroding weight for sterling. Tensions within Theresa May’s cabinet over the customs union, and rumours of a potential vote of no confidence in the Prime Minister and subsequent snap election, have helped extend the pound’s miserable spring showing. Against the dollar, which itself is benefiting from the trade war developments, sterling is down 0.6%, forcing cable below $1.341 for the first time in 2018; against the euro, meanwhile, the pound has slipped 0.4%, losing a chunk of last week’s rebound.

Turning to this afternoon and the Dow Jones is set to rocket higher on the back of Treasury Secretary Steven Mnuchin’s calming comments over the weekend. The futures have the Dow shooting up by 240-ish points when the bell rings on Wall Street, an increase that will put the index back in the ballpark of 25000, a level it just about grazed this time last week.

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