British Pound Recovers Slightly, But Remains the Weakest
The British pound recovers mildly today but remains the weakest one for the week on political turmoil in the UK. On November 14, the British Cabinet approved the Brexit agreement. But the next day, two ministers from the team of Prime Minister Theresa May resigned in disagreement with this decision.
As a result, the UK is plunging into a serious political crisis that could lead to extraordinary parliamentary elections, or a repeated referendum on EU membership, or to the first and second at the same time. For now Theresa May decisively rejects the idea of a repeated referendum, stating that with or without an agreement, the UK will leave the EU.
On stock markets, DOW rebounded overnight and closed up 0.83% at 25289.27. S&P 500 added 1.06% and NASDAQ gained 1.72%. In Asia, Nikkei fell 0.08%. Hong Kong HSI added 0.28%. China Shanghai SSE rose 0.88%. Singapore Strait Times increased 0.97%.
Neel Kashkari (Minneapolis Fed President) reiterated yesterday that he didn’t see the need to continue raising interest rates. And, he saw no signs of overheating while low wage growth suggests the labor market are more slack. He also pointed to slowdown in other major economies, in the context that Japan and Germany GDP contracted in Q3.
US Commerce Secretary Wilbur Ross noted that the US is still planning to raise tariffs on USD 200B in Chinese imports from 10% to 25% on January 1. Meanwhile, the representatives of China and the United States continue to prepare for the meeting of the leaders of the two countries, which may be held at the end of the month within the framework of the G20 summit. Prior to this, it is likely that the Chinese side will visit the United States. So, in the near future, a certain reduction in tension around the trade confrontation between Washington and Beijing is possible, which should have a positive impact on market sentiment.