Global markets experienced a relatively quiet day yesterday with the stock indices once again taking another step back as investor confidence wains on continued trade concerns and poor data. Chinese export numbers yesterday added to poor data out of Europe last week and with doubts still persisting on the Sino-US trade front analysts are worried that we’ll see a further weakening of global growth over the first quarter of the year. US banks started their reporting season yesterday and despite a mixed bag of results from Citi, which was better than expected, the S&P still dropped on the day. The greenback held at relatively steady levels with the Dxy trading around 95.60, as did most of the majors, however this situation isn’t expected to last through today’s trading sessions with the key Brexit vote due.
It’s a huge day for the UK with Theresa May’s Brexit deal firmly anticipated to be rejected by parliament. Sterling has remained strong in light of the expected result, however it has the propensity to move violently to either side in the aftermath of the decision with anything pointing towards a hard Brexit pushing it lower and anything, including a general election, second referendum or a deadline extension leading to good relief rallies. There is of course a chance that the deal could be passed and this, although not a seemingly popular result politically could be the smoothest result for global markets. Whatever the outcome today, it does look set to be a volatile few days ahead for sterling traders with more political wrangling and possible outcomes only leading to more wild swings in the pound.
Looking ahead to todays trading and it looks like we’ll have a relatively quiet couple of sessions first up before the storm hits, probably with the New York open. There’s little in the way of fundamental data to distract investors until we hit the US session with sentiment set to continue to drive the overall market. However things should get more lively in the New York time zone, first up we have the US PPI data, followed by ECB President Mario Draghi speaking in front of the EU parliament and then the Brexit vote result which could lead to a very lively session indeed.