Global markets are closing out the week on a high, with the US-China breakthrough and Conservative landslide improving sentiment. In the UK, housebuilders and banks lead the way, as the fog clears from years of uncertainty.

  • US-China deal sparks market surge
  • Banks and housebuilders lead domestic rally
  • GBP eases back after sharp post-election appreciation

Global markets are on the rise today, with two long-running sagas being resolved within hours of each other. The phase one US-China trade deal focuses on increased Chinese purchases on agricultural products, in exchange for a lessening of the current tariffs in place. The sceptics will note that China has hugely cut down on their purchases of US agricultural goods, and thus the devil will be in the detail to note whether this is really the boon Trump insists it is. However, for markets this breakthrough is hugely notable as it eases the shackles placed upon a country which remains one of the biggest drivers of economic growth. Sentiment-wise, the events of this week will certainly have a  material impact, with many hoping to see high street spending and business investment jump as we close out the year. With US stocks reaching record highs, it seems that Santa is coming in a very different form this year.

The FTSE 250 has enjoyed an incredible end to the week, as the prospect of a business-friendly government is enhanced by a simultaneous phase one trade deal between the US and China. Chief amongst the gainers has been highly domestically orientated firms such as the housebuilders and UK-focused banks. The big question now is quite the degree to which business and investors alike will begin to open the financial taps after this huge cloud of political and economic uncertainty is lifted (for now).

The pound has spent much of the day drawing back from long-term highs established overnight. To some extent this could be an element of ‘buy the rumour, sell the fact’. With sterling having gained 8% in the month leading to this election, the somewhat controlled surge in the pound reflects the fact that markets had explicitly prepared for a Conservative majority. The optimists out there believe that Johnson could use his substantial majority to ensure the UK leaves with a good deal rather than a quick deal. However, the outlook for Brexit trade negotiations remain unclear, with clarity likely to provide direction for the pound going forward.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD trims intraday gains returns to mid-1.17

The EUR/USD pair retreated after flirting with the 1.1800 figure, as the market mood somehow turned sour. Focus on the next US fiscal relief package, coronavirus, and economic progress.

EUR/USD News

GBP/USD approaches 1.3000 once again

GBP/USD is easing towards weekly lows as dollar bulls are giving it another try. Brexit concerns and UK lockdowns in the eye of the storm.

GBP/USD News

XAU/USD bull-bear tug-of-war extends around $1975

XAU/USD sidelined heading into the European session. Downside limited by dollar weakness, coronavirus concerns. Focus remains on the USD dynamics and the United States/China updates.

Gold News

What you need to know about trading in August

The generally received wisdom is that summer is a quiet month for trading. Traders are on holiday and markets quieten down. That’s the expectation among many. However, the reality is that August can be one of the most volatile trading months of the year.

Read more

WTI: Bulls await API data to attack $41.00

WTI struggles to extend recovery moves from $40.74 beyond $41.00. Virus woes join OPEC output increase to combat drop in Russian oil production. US Factory Orders, API inventories will be the key.

Oil News

Forex Majors

Cryptocurrencies

Signatures