After Brexit officially happened on Friday, this week there is already an influx of news regarding the future of the relationship between the United Kingdom and the European Union. Many feared the possibility of the two sides to reach a comprehensive trade agreement in just 11 months (Boris Johnson’s self-imposed deadline).
Now the UK Prime Minister has agitated markets further by stating that he will be alright without a Free Trade Agreement, as long as the UK is free from the jurisdiction of the European court. It is highly unlikely that the European Union would agree to a deal like that. As a result, the British pound slumped against both the dollar and the euro.
Moreover, today the Chinese stock markets are having yet another grim day. The coronavirus epidemic that started in Wuhan and spread throughout China continues to cast a dark cloud over the Chinese economy, prompting negative expectations from investors and dragging the markets down. There was an 8% crash on the Chinese stock markets, while the Chinese yuan reached a two-month low against the US dollar. The People’s Bank of China is trying to contain the situation but so far its attempts to mitigate the damage have not paid off.
The picture is very different in other stock markets. In the United States, as well as Europe, there have been modest increases. Dow 30, Nasdaq 100, S&P 500, and Stoxx 600 were all in the green today.
On the fundamental reports front, today there were some PMI reports from the eurozone released, which showed the economy fared better than expected in January, though still below 50, which means the economy is shrinking rather than growing.
The US PMI reports will be published a bit later today.
