Happy Article 50 Day to EU?

Markets are broadly higher this morning, as the UK sends its formal Article 50 notification to the EU.

- Brexit now the definite article
- Market rebound continues
- Banks and energy stocks find their footing again

The big day is finally here, but aside from some short-term gyrations in sterling the impact of the Article 50 activation is relatively small. The day's story will focus on the actual delivery of the note, which will go down in history as one of those key moments when the diplomats take the limelight, however briefly. However the real impact will be in the response from the EU, both in the near-term and over the next few months as the bloc begins to put its negotiating position together in concrete fashion. Stock markets have been a touch jittery, but the message of the week appears to be that dip buying is still very fashionable, even if the rationale behind it is hard to figure. A dearth of real news, plus ongoing worries about the outlook for new policies in the US, would normally incline investors to be cautious. But in a reflationary global environment, with economic growth picking up, it remains the case that equities are still the place to be.

Yesterday's gains in the US were led by energy and financial stocks, which have revived thanks to a resurgence in oil and in expectations of US economic growth respectively. Sentiment however remains bearish, which is probably as good an indicator as any that the rally has further to go. This afternoon's EIA crude figure is the only big data point of note, and should continue to provide plenty of volatility in oil, as well as providing a brief but nonetheless welcome distraction from the UK's divorce from the EU. Ahead of the open, we expect the Dow to start at 20,684, down 17 points from last night's close.