NEW YORK, March 27, 2019 (BSS/AFP) – Sterling rallied Tuesday on fresh
hope that British Prime Minister Theresa May would avoid a chaotic no-deal
Brexit, while global stock markets recovered.
As Wall Street shrugged off more weak economic data to push higher, the
pound jumped as high as $1.3262 in London morning deals, before tempering the
gains by the afternoon.
The euro fell as low as 85.25 pence on hopes of an orderly departure from
the European Union on April 12.
The long-running saga took a fresh twist after Brexit hardliner Jacob
Rees-Mogg declared on Twitter: “The choice seems to be Mrs May’s deal or no
Brexit.”
Rees-Mogg, head of the European Research Group of eurosceptic lawmakers
and an MP for May’s Conservatives, also said in a political podcast interview
that “the PM will not deliver a no-deal Brexit.”
Oanda analyst Craig Erlam said it had been clear for months that “May’s
strategy has been to corner sceptics into backing her deal”.
– Perking up –
“The idea that the risk of no deal or no Brexit would be enough to win
enough votes may be starting to bear fruit just as parliament seeks to wrest
control of the process,” he told AFP.
“Securing the backing of a high profile ERG member like Rees-Mogg —
albeit reluctantly — could dramatically improve May’s numbers. It’s now just
a question of whether it’s too little too late.”
The remarks came a day after Britain’s parliament seized the initiative in
a historic vote to give MPs a broader say on what happens next, creating time
to come up with their own Brexit proposals as Britain tries to stave off a
messy divorce in two weeks.
They will now choose whether to revoke Article 50 and cancel Brexit, hold
another referendum, vote for a deal including a customs union and single
market membership, or leave the EU without a deal.
However, even if they decide a majority course of action, the government
is not legally bound to follow their instructions.
The move came after May admitted she still had not secured the votes
needed to get her Brexit deal through parliament.
– Stocks brighten –
Meanwhile global stocks rebounded after the previous day’s losses in many
markets, though dealers trod cautiously, still reeling from Monday’s
pummeling which came on the back of a drop in benchmark 10-year Treasury bond
yields below those for three-month bills for the first time since before the
global financial crisis.
This so-called inverted yield curve shows investors are more willing to
buy long-term debt — usually viewed as a higher risk — as they consider the
short-term outlook more hazardous. That flip has preceded several recessions
in recent decades.
After last week’s rout and more struggles Monday, Wall Street posted solid
gains, despite disappointing data on US home construction and consumer
confidence. The S&P 500 gained 0.7 percent, off the day’s high point.
Apple slipped more than one percent after an International Trade
Commission judge ruled the company violated a patent held by chipmaker
Qualcomm and recommended banning imports of some iPhone models.
Paris stocks outperformed their peers after the French government reported
its lowest budget deficit as a percentage of GDP in 12 years, and the Insee
national statistics office upped its forecast for French growth.
London, meanwhile, was held back by sterling’s strength which tends to
penalize multinationals generating much of their earnings in foreign
currencies.
– Key figures around 2030 GMT –
New York – DOW: UP 0.55 percent to 25,657.73 (close)
New York – S&P 500: UP 0.72 percent to 2,818.46 (close)
New York – Nasdaq: UP 0.71 percent to 7,691.52 (close)
Pound/dollar: UP at $1.3201 from $1.3195 at 2100 GMT on Monday
Euro/pound: DOWN at 85.31 pence from 85.75 pence
Euro/dollar: DOWN at $1.1264 at $1.1312
Dollar/yen: UP at 110.55 yen from 109.97 yen
London – FTSE 100: UP 0.3 percent at 7,196.29 points (close)
Frankfurt – DAX 30: UP 0.6 percent at 11,419.48 (close)
Paris – CAC 40: UP 0.9 percent at 5,307.38 (close)
EURO STOXX 50: UP 0.6 percent at 3,319.53
Tokyo – Nikkei 225: UP 2.2 percent at 21,428.39 (close)
Hong Kong – Hang Seng: UP 0.2 percent at 28,566.91 (close)
Shanghai – Composite: DOWN 1.5 at 2,997.10 (close)
Oil – Brent Crude: UP 85 cents to $68.06 per barrel
Oil – West Texas Intermediate: UP $1.23 to $60.05