Thursday 12 December
What started as a fairly dull session exploded into action on Thursday, both on the election and trade deal fronts.
For the US and European indices the focus was a tweet from Donald Trump stating that Washington is ‘getting VERY close to a BIG DEAL with China’. Interestingly, not only did he say that ‘they want it’ – a regular refrain from the President – but that ‘so do we!’ On top of this the WSJ reported that US negotiators have offered to cut existing tariffs – Beijing’s major red line – to get the deal done.
All this has sparked hopes a ‘phase one’ agreement can be put in place before the US smacks another $156 billion in Chinese goods with tariffs on Sunday. Or, if not a signed off deal itself, then at the very least a delay to that long-scheduled hike in order to give time for the i’s to be dotted and the t’s to be crossed.
Investors got a bit giddy following the tweet, swiftly pivoting their attentions away from Christine Lagarde’s first meeting as ECB chief to pour into the Western indices. The Dow Jones shot up by 300 points, rocketing back to 28200 to hit a fresh all-time high. The DAX and CAC climbed around 1% apiece, with the FTSE once again passing 7300 thanks to a 90 point increase.
With the Telegraph’s final poll suggesting the Tory lead has shrunk to just 5 points, putting the result of the election in potential hung parliament territory, the pound had a notable wobble. Against the dollar it fell half a percent, cable returning all of yesterday’s Fed-inspired gains; against the euro, meanwhile, a 0.3% drop took sterling back to €1.182.
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