You’d expect US and Asian markets to gain on news that phase one of a US–China trade deal was given the nod of approval.
And so they have.
The Dow Jones Industrial Average is up 1.5% over the past week. No blistering gains. But don’t forget that the US markets are already in record high territory.
And also don’t forget all we have is a nod at this stage, not a signed trade agreement. Chinese negotiators still need to ‘translate’ the document…and perhaps revise it…before Xi Jinping breaks out his ceremonial pen. It all could still fall apart.
Nonetheless, markets are trending higher on news of the trade détente, with the ASX 200 up 1.6% since last Wednesday.
As we said, that’s as you’d expect.
What we weren’t meant to expect is that news of an almost assured January Brexit saw the UK’s FTSE 100 surge 2.3% on Monday. That followed on a 1.1% gain on Friday. And the UK’s top 100 stocks delivered another, albeit smaller, 0.1% gain yesterday (overnight Aussie time).
Wasn’t Britain breaking away from the EU’s cosy embrace meant to unleash chaos? What about the forecasts for Britain’s GDP to fall by more than 5%. Or London to lose its leading role as a global financial hub?
So what’s really going on?
Well first, markets hate uncertainty. Meaning an assured Brexit is better than months…or years…more investment doubt.
Second, investors aren’t fooled by the globalist scaremongering meant to reverse the Brexit vote and keep the UK under Brussel’s thumb. It won’t all be smooth sailing from here. But at the end of the day an unfettered UK looks to be a much stronger place to invest some of your money.
Oh, and let’s not forget Jeremy Corbyn. You can almost hear the free market’s collective sigh of relief that his socialist agenda is off the menu.
How this all plays out in 2020 remains to be seen. But over at The Rum Rebellion, our editors will be keeping a close eye on the ramifications for Australian investors.
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