Summary:
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US benchmarks make new all-time highs
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DE30 hits fresh 2019 peak
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Tusk announces EU27 agree upon Brexit extension
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GBP a little higher ahead of election vote
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RBA could purchase bank bonds
The recovery from the sell-off seen earlier this summer is now complete for US stocks with the S&P500 moving above the prior peak from July to move up to a new all-time high. The recent high now marks the 4th fresh record high since the start of 2018 and it is not too surprising that is has come on the back of a positive trade headline. Reports from Reuters that Trump expects to sign a China trade pact at the APEC meeting in Chile (November 16-17th) are the catalyst for this latest leg higher and the market is now up by over 6% from the low seen at the start of the month.
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Create account Try a demo Download mobile app Download mobile appThe German DE30 is surging again on Monday enjoying news on Brexit extension and is already 9% up from the October low. At present buyers have no major technical obstacle until 13200 points – a double top from June 2018. This week market sentiment will be driven primarily by the FOMC (Wednesday, 6pm BST) – interest rate cut is expected but traders also want to know what the Fed could do next.
Despite some lingering concerns that they wouldn’t, the EU27 have done what most observers had expected in agreeing to a Brexit flextension until January 2020. Donald Tusk has tweeted confirmation in recent minutes, also stating that it is expected to be formalised through a written procedure later on. Speculation that the bloc would only entertain a shorter extension at the request of France had caused some doubts but it appears that once more the EU are trying hard to be seen to not force the issue.
By its own recent lofty standards it’s been a fairly quiet day for the pound, but we could be set for some volatility this evening with MPs set to vote on Boris Johnson’s call for an election on December 12. Given that a ⅔ majority is required it is unlikely that this will pass, but also keep an eye on the plan from the Lib Dems and the SNP for a December 9 election which has a better chance of passing as it would only need a simple majority.
A debate on this is scheduled to get underway around 17:30 GMT, with a vote taking place sometime after 19:00 GMT.
Australian Treasury warned that rate cuts delivered by the Reserve Bank of Australia are squeezing bank profit margins and that it why the central bank may soon have to resort to some measures intended to help banks deal with such downward pressure. What could be the most interesting point here is the fact that according to Josh Frydenberg, the head of Treasury, the central bank could initially start buying bank bonds and residential-mortgage backed securities (RMBS) to lower borrowing costs for households and businesses.
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