Reports that Britain and the European Union are close to a post Brexit trade deal lifted market sentiment overnight. Both the pound and the FTSE 100 shot higher. However US enthusiasm was reined in by the President’s veto of a defence bill, and an implied threat to veto the $900 billion stimulus bill passed by both houses yesterday.
Anonymous reports that agreement was close on a British/European trade arrangement bolstered markets. The last major sticking point is fishing rights, and the leaks may have been aimed at pressuring Britain to concede on the issue to ensure a deal is done. Regardless, there is optimism that the outline of a compact may be signed before Christmas.
The US dollar dropped as confidence grew. Commodity currencies rallied, and crude jumped more than 2% as base metals rose. Bonds sold off, although gold managed a small gain as the dollar fell. Cryptocurrencies were thumped, with a particular focus on emerging coins. NEO, EOS and Ripple all posted double digit losses, yet Bitcoin is holding juts below US $23,000.
US data didn’t help. Personal spending and inflation disappointed, and various sentiment readings pointed to a subdued consumer. Housing numbers also missed, with an 11% fall in sales in November. President Trumps’ moves to delay legislation are worrying because the President’s intentions in doing so are unknown. The last three weeks of Trump’s presidency may yet hold market moving surprises.
Asia Pacific futures point to a positive start to regional stock trading. Japanese investment flows and Singapore industrial production numbers are released today. Australian stocks may outperform, given general commodity strength and further gains for iron ore in particular.