Summary:
-
Phase one trade deal reached
-
Existing 15% levies will be halved but 25% tariffs remain
-
Risk-on move at first but then pares
-
GBP pares early election gains but remains firmly higher
After some concern earlier today it does now appear that the US and China have made a significant breakthrough in their frosty trade tensions in news that initially sparked a broad risk-on move in the markets, although this has faded somewhat subsequently. Both sides have agreed to a Phase One Deal which means no additional tariffs will be placed on Chinese imports although the 25% tariffs will remain in place but the 15% levies cut in half.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appThe US500 earlier hit a new record high of 3185 but has since fallen back and trades around 25 points from that peak at the time of writing. It’s been a topsy turvy day for Gold which on balance hasn’t really gone too far while the EURUSD has moved back to the levels seen before the spike higher on last nght’s UK election result.
What had been billed as a close thing turned out to be anything but as the UK election saw a decisive victory for the Conservatives and their leader Boris Johnson who has now delivered the biggest majority for the party since the 1980s. Given what the polls showed leading up to the vote the outcome had effectively boiled down to a binary result of either a Conservative majority or a hung parliament and as soon as the exit polls were released, just after voting closed at 10PM, it quickly became clear that barring an unprecedented swing this would be a big victory for the Conservatives.
GBPUSD jumped sharply on the exit poll, surging over 340 pips in less than an hour from the release. Since then the market has pared back a little but still remains firmly higher on the day and trading above the $1.33 handle.
Overall the stock market has reacted well to the result with shares in banks, house building firms and utility companies amongst the best performers. The top 3 places in the blue-chip index are occupied by housebuilders with Taylor Wimpey, Berkeley Group and Barratt Developments all sitting on double-digit gains. RBS, Barclays and Lloyds Banking Group are not too far behind with all these firms showing similar moves to those seen back in October when the pound also soared as Boris Johnson brought his new deal back from the EU.
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
