Heading into the close, the FTSE 100 is down 24 points, but sterling is rallying on hopes of an extension to Article 50.
It has been another good week for equity markets, which have succeeded in adding to their gains over the past five days. Hopes of trade talk progress have been a key driver, but with today’s US CPI reading easing off there are further signs that the near-term impetus for the Fed to keep tightening policy is ebbing away. The recent comments from the chairman have been reinforced by a chorus of senior Fed officials, helping to calm volatile markets. The bounce has helped to provide a more positive view of matters, but earnings season will be the crucial test for sentiment, providing a better view of whether the dramatic sell-off of Q4 2018 was as overblown as some think, or merely a dress rehearsal for something much deeper.
As the UK hurtles towards Tuesday’s meaningful vote, the signs of a shift in position become clearer. Time is fast running out, but with so much still to be done an extension to Article 50 becomes vital. Cable continues to trade as if an extension is very much on the cards, underscoring the point that markets would still very much prefer to forget the whole thing ever happened in the first place.
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