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The FTSE opened marginally down this morning, led by miners like Fresnillo and Antofagasta. But there were no major swings in the index and the biggest mover, Barratt Developments, only climbed 2.27%. It looks as if the stock market is taking a breather with few big names reporting until later next week.

On the political front, the drama has died down as the Lords have debated the proposed legislation to block a hard Brexit. The Conservative party is still pushing for an election but the prime minister is unlikely to get his wish until Parliament can see a hard Brexit is off the table. The current government was further undermined yesterday when the prime minister’s own brother announced he was resigning.

There was some more overnight selling in the GBP/USD market, with sterling dropping sharply from 1.2345 down to 1.2300 which is holding currently as a resistance level. Sterling is taking back some territory from main global currencies like EUR and JPY in what is something of a relief rally, but there will likely be further volatility next week once we hear more about the prospects of an election.

US market rallies again on hopes of China trade deal, but recession lurks

The US market predictably rallied yesterday on news that the country is going back to the negotiating table with China, with the S&P 500 hitting a one month high. It was the biggest one day gain for the S&P in about three weeks. Concerns remain about those US bond yields and over the longer term investors and fund managers are asking searching questions about the health of the US economy. Conventional indicators are pointing to a recession next year.

“Payrolls numbers will today be the major risk event,” said Neil Wilson, chief markets analyst at Markets.com. “Strong ADP numbers, combined with the upbeat ISM services print, bodes well for another solid reading that will again betray the fact the US economy is is further from recession than real and anticipated Fed policy moves would suggest.”

Asian stocks were also in bullish mood, with gains in China and Japan. China in particular is mulling further stimulus measures.  Hong Kong’s Hang Seng Index is also in positive mood after the territory’s government took its proposed extradition bill off the table. On the downside, the territory was also downgraded – somewhat inevitably – by Fitch from AA plus to AA negative.

Gold sells off slightly on back of optimism – too soon?

In the commodity markets gold has started to slide a little from $1519 to $1506, before rallying again after European markets opened. This can be put down to some short term optimism prompted by a number of the key political issues of the past few weeks looking like they are a step closer to resolution.

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Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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