Stocks jump on trade hopes; GBP traders await election result

Summary:

• US500 soars to ATH on Trump tweet

• Gold earlier hit 5-week high on US data before falling lower

• ECB delivers little by the way of a surprise

• UK election results tonight; What’s expected

There was a sharp market reaction this afternoon after Donald Trump tweeted that a trade deal with China is close and both sides look forward to it. It’s not the first such tweet in recent months but this time it’s important as markets were looking for answers ahead of the December 15 deadline for additional tariffs. Indices soared in response with the US500 hitting a new ATH at 3177 points and while the gains have pared a little into the European cash close the market remains on course for its highest ever daily close. 

Earlier there was a notable and outsized move in Gold after some worse than expected data from across the pond for the US dollar. The weekly initial jobless claims is normally not too market moving but a big spike in the latest read has likely played a role in the rally for Gold. A reading of 252k was well above the 213k expected and further above the 203k prior and in fact you have to go back to September 2017 to find a higher reading. The precious metal hit a 5-week high above $1485 before tumbling lower on the Trump tweet and at the time of writing is trading some $20 below the earlier peak. 

Christine Lagarde’s 1st press conference as ECB president has delivered no major shocks and as such there’s not been any major lasting moves in the single currency or the European stock markets. There were minor tweaks to both the GDP and inflation forecasts but on the whole this has come and gone as something of a non-event as was perhaps expected given the recent move from her predecessor to provide additional monetary stimulus. The EURUSD attempted to move higher over the event but the rally fizzled out above 1.1150 and the market is now trading back to little changed on the day. 

We’re expecting a heightened level of volatility in the GBP this evening with the 1-day implied volatility in the GBPUSD cross at its highest level since the period around the 2016 EU referendum. 

6 important charts to be aware of involving the election can be found here

A breakdown of when we can expect to see the results can be viewed here.