Pound set for solid weekly gains; Chinese stocks post 7th green week in a row

Summary:

• Pound set for solid weekly gains
• FTSE remains near 4 1/2-month highs
• Chinese equities post 7th weekly gain in a row

Pound set for solid weekly gains

It’s been yet another tumultuous week for British politics with news this morning that MP Ian Austin has resigned from the Labour party, bringing the total number of ministers to leave the opposition party since Monday to 9, while a further 3 Conservative backbenchers have followed suit. Unlike the 11 MPS before him, Mr. Austin has ruled out joining the Independent party, choosing to stand alone as an independent. What this all means in the grand scheme of things remains a quandary to many, and as such there’s not been a clear reaction in the markets with the pound still on course to post a solid week of gains. The biggest appreciation in sterling can be seen against the Antipodean currencies, with the GBP/NZD higher by almost 2% and the GBP/AUD up by 1.4%.

The Pound is rising against all its major peers on the week, with the largest appreciation seen against the NZD and AUD. Source: xStation

FTSE remains near 4 ½-month highs

It’s been a week of consolidation on the whole for UK stocks, with the FTSE 100 still close to its highest level since early October but having said that the market is still on course to end a 3-week winning streak. The index has recovered today after dropping to its lowest level of the week on Thursday, and market appears to be biding its time before its next big move. This wait-and-see approach to trade is understandable given the ongoing Brexit uncertainty, while from a global-risk perspective, investors still await the latest developments in the US-China trade dispute with tariffs set to be increased next Friday if an extension can’t be agreed upon. The best performing stocks in London today come mainly from the Mining sector with Glencore, BHP Group and Anglo American all featuring prominently on the leader board after Chinese shares extended their rally overnight.

Chinese equities post 7^th weekly gain

The recovery come rally in stock markets seen for much of this year is going from strength to strength in the Far East, with Chinese shares posting a 7^th consecutive weekly gain. This marks the best run since 2016 and the gains in excess of 5% since Monday represent the biggest weekly rise in nearly 3 and a half years. Looking at the market internals, there’s also pleasing signs that are suggestive of a strength underpinning the move with all but 1 of the 10 sectors up by over 10% this year – the one sector lagging is utilities which are usually associated with defensive allocations and therefore underperformance here is in fact a good sign.

Chinese shares have extended their recent gains with the benchmark breaking out above the 11220 resistance level. Source: xStation