With political storms brewing both sides of the Atlantic, investors found little appetite for riskier assets such as shares. European bourse dropped sharply across the board. Whilst the DAX dived over 1% the FTSE fared slightly better, finding support from the tumbling pound.
As Parliament reconvened, pound traders’ optimism over Brexit was nowhere to be seen. Instead the pound tanked amid elevated levels of political uncertainty. Traders are focusing their attention on what happens next. And this is proving to be a challenging question to answer.
A general election, an extension to Brexit and a no deal Brexit are all still contenders. However comments by the Attorney General that a motion for a general election will be brought to Parliament shortly has fanned fears that the U.K. could be heading to the polls with just 5 weeks to go until Brexit. For pound traders that could be a lose lose prospect; either Jeremy Corbyn takes the reins or Boris Johnson wins a mandate to push a no deal Brexit through.
Traders’ attention will stay glued to developments in Westminster. We can expect the next few weeks to be a wild ride for the pound as traders jump from headline to headline trying to anticipate how the drama will end or whether it will end?
Sainsbury (LON:SBRY) and Boohoo (LON:BOOH) Impress
On the FTSE, Sainsbury’s appeared on the leader board after confirming it would close another 70 Argos stores and as it announced it will stop its mortgage lending service immediately.There was nothing to cry about in Boohoo’s results. The largest company on AIM revealed soaring sales which surpassed £1 billion and profits which skyrocketed 83% as it continues to defy the slow down on the UK high street. There was nothing to dislike, growth across all brands, market share increase Boohoo has struck a winning formula.
US markets whipsaw
News of an impeachment investigation into Trump pulled US stocks sharply lower in the previous session, with whipsawing action continuing today. Whilst there are clearly concerns over the impact of such an investigation, it still needs to be cleared by the senate. With this in mind, the panic of yesterday has eased, for now.
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