Global stock markets recovered well during yesterday’s trading as investor sentiment swung back to the positive on deal news and strong Retail Sales numbers out of the US. News of large M&A deals helped boost the market after a tough last week and the US Core Retail Sales number was much better than market expected, coming out at 0.9% against the anticipated 0.4%. US tech stocks in particular jumped higher with the Nasdaq closing up just over 2% with the S&P not too far behind at 1.4%. The Dow had been expected to struggle after a second tragic crash involving Boeings new 737 max, but it closed up 0.79% with Boeing being the only component of the index to drop on the day. The dollar retreated once again, the Dxy is trading back under 97.20 on the Asian open. Oil continued to trade higher after the Saudi’s confirmed even stronger production cuts than had been priced in, the WTI trading at $56.80 and Brent at $66.50 and Gold dropped off from Friday’s highs.
Brexit is a big focus for today’s trading session with the UK’s parliament set to vote on Theresa’s May’s latest deal proposal. Sterling had gained ground overnight on news that PM May was set to travel to Strasbourg for a last minute meeting with Jean-Claude Juncker and news this morning that she has secured a deal that the whole cabinet has approved of has sent it even higher in early Asian session trading. Cable has rallied over 2.5% in the last 24 hours and EurGbp is off over 2.3%. The initial rally had come on the back of hopes for a Brexit delay but the latest move is more on the possibility that the PM has managed to negotiate a deal that can pass through parliament and lead to a soft Brexit on the planned date in just over a fortnight. The market is still awaiting further details and sterling traders will be poised for more volatility in the coming trading sessions as investors now weigh up that latest information and the likelihood of Brexit actually taking place on schedule.
Looking ahead to the rest of todays trading and its quiet in terms of economic data releases in the Asian session, however there will be some central bank action in the form of speeches from Fed Chair Jay Powell and RBA Assistant Governor Guy Debelle. The focus for the European session will be well and truly on London with UK GDP and Manufacturing Production data due out as well as Brexit developments and the parliamentary vote. US data will once again come into focus in the New York session with key CPI data due for release, but once again expect the major focus to remain on Brexit as the day progresses and the vote result is announced.