U. S. equity index futures have bounced on the last day of the week, along with European and Asian shares, oil and the dollar following overnight news that the UK and EU have reached a successful conclusion on Phase 1 of Brexit negotiations, that Congress averted a government shutdown with another can-kicking 2 week measure until December 22, after strong Chinese trade data and an upward revision to Japanese GDP, and ahead of the November nonfarm payrolls data which is expected to cement the December Fed rate hike.
Setting the bullish mood this morning was Christmas coming early for Theresa May, who managed to forge an agreement – if only for the time being – with the EU in the early hours of Friday morning to pave way for phase 2, with talks set to move to trade with support being voiced by Senior Brexiteers, Gove and Johnson. In reaction to this, GBP initially hit a 6-month high, however once the agreement had been confirmed, the pound saw a “buy the rumour sell the news” price action, while gilts were met with selling pressreure with the price making a firm move below 124.00.
Also after the close on Thursday, the House voted 235-193 and Senate voted 81-14 to pass the stopgap spending measure which will avoid a government shutdown and fund government through to Dec. 22nd, kicking the can on and averting a government shutdown for another two weeks.
European stocks advance in a broad rally amid optimism over a newly-struck deal between Britain and the European Union to unlock divorce negotiations and proceed to discussing a future trade deal. The Stoxx Europe 600 Index rises 0.7%, with the index heading for a weekly gain of 1.3%. Banks advance the most, up for a second day, as the sector emerged relatively unscathed from global regulators’ final batch of Basel III post-crisis capital rules, with few lenders needing to raise major new funds. Miners are also among the best indusreptry group performers, following copper prices higher. The FTSE 100 is trailing other European indexes, trading little changed, as the pound climb.
This post was published at Zero Hedge on Dec 8, 2017.