Brexit breakthrough boosts European stock markets, pound

European Union’s chief Brexit negotiator Michel Barnier holds a press conference at the European Commission headquarters in Brussels, Belgium December 8, 2017. — Reuters picEuropean Union’s chief Brexit negotiator Michel Barnier holds a press conference at the European Commission headquarters in Brussels, Belgium December 8, 2017. — Reuters picLONDON, Dec 8 — Europe’s stock markets rose today and the pound briefly topped US$1.35 on news of Britain’s breakthrough Brexit deal.

Asian stock markets rallied after overnight gains on and before key US non-farm payrolls data due today.

Cryptocurrency bitcoin broke fresh records above US$17,000 on speculative buying, but then slid on profit-taking to stand at US$15,376 around 1100 GMT.

London’s benchmark FTSE 100 index was meanwhile up 0.3 per cent compared with yesterday’s close.

In the eurozone, Frankfurt’s DAX 30 index jumped 1.4 per cent and the Paris CAC 40 won 0.6 per cent.

“The Brexit breakthrough is welcome news… but it is probably too early to pop the champagne,” Rebecca O’Keeffe, head of investment at online stockbroker Interactive Investor, told AFP.

Britain and the European Union reached a historic deal on divorce terms that allows them to open up talks on a future relationship after the split.

The news bolstered confidence in the Conservative government of Prime Minister Theresa May, who had faced sharp criticism earlier this year after calling a snap election in which she lost her UK parliamentary majority.

On its EU divorce bill, Britain agreed to pay between €45 billion and €55 billion.

Breathing space

“This does give Theresa May some breathing space in the short term, but her government is still relatively precarious with Brexiteers and Remainers struggling to find common ground,” said O’Keeffe.

“The next stage of talks (on trade) is potentially even more difficult than the first.”

She added that UK yields rose as the removal of Brexit uncertainty prompted many investors to shift cash out of bonds and into .

Today’s agreement paves the way for EU leaders at a summit on December 14-15 to open the second phase of Brexit negotiations, covering trade talks and a transition period.

“One important part of the Brexit deal today is that the May government will live to see another week,” said Rabobank analyst Jane Foley.

“This alone is a positive factor for the pound,” she added.

In early morning London deals, the pound briefly nudged beyond US$1.35 before trimming gains.

“Investors are breathing a sigh of relief that the UK and the EU have agreed a divorce bill but the trade negotiations are likely to be protracted,” said NFS Macro analyst Nick Stamenkovic.

“Consequently any upside in the pound is likely to be limited near term.”

Today’s deal will ensure there would be no return of checkpoints on the frontier between British-ruled Northern Ireland and EU member Ireland after Britain leaves the EU bloc on March 29, 2019.

“It was important to come to an agreement on the financial settlement, the Irish border and citizens’ rights before year end but the hard work begins now,” said Oanda analyst Craig Erlam.

“The champagne will have to remain on ice until next Christmas.”

Key figures around 1100 GMT

London – FTSE 100: UP 0.3 per cent at 7,341.72 points

Frankfurt – DAX 30: UP 1.4 per cent at 13,225.80

Paris – CAC 40: UP 0.6 per cent at 5,413.82

EURO STOXX 50: UP 1.0 per cent at 3,609.23

Tokyo – Nikkei 225: UP 1.4 per cent at 22,811.08 (close)

Hong Kong – Hang Seng: UP 1.2 per cent at 28,639.85 (close)

Shanghai – Composite: UP 0.6 per cent at 3,289.99 (close)

New York – DOW: UP 0.3 per cent at 24,211.48 (close)

Euro/dollar: DOWN at US$1.1737 from US$1.1773 at 2200 GMT

Pound/dollar: UP at US$1.3477 from US$1.3474

Dollar/yen: UP at 113.54 yen from 113.09 yen

Oil – North Sea: UP 26 cents at US$62.46 per barrel

Oil – West Texas Intermediate: UP 16 cents at US$56.85


Source: The Malay Mail Online

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