Focus Remains on Tech
European stocks made impressive gains on Monday, playing a little catchup from the late rally on Wall Street on Friday and as the US celebrates Labor Day bank holiday.
The tech sell-off in the US last week has dictated sentiment and re-energised these markets. The US bank holiday brings with it a certain calmness although European stocks have built on early gains as the day has progressed. Economic optimism is improving which could benefit the non-tech sectors that have had a harder time in recent months.
Given the bounceback late last week, it will be interesting to see how tech responds on Tuesday, with Nasdaq futures back in the red while the Dow and S&P are heading for small gains. It’s always going to have added interest when a stock like Apple falls around 20% in a few days and it’s not even hit a one month low. These stocks are on a wild ride.
Sterling slides as Boris prepares us for no deal
The FTSE is the outperformer in Europe buoyed by the drop in the pound which came as UK Prime Minister Boris Johnson once again prepared us for no deal. There is little doubt this is a negotiation tactic ahead of the October 15th deadline that both have set for these talks but the walls are fast closing in.
No deal may be the less desirable option for the UK and EU, particularly in the midst of a pandemic but both sides are going to have to blink soon or they may find themselves in an extremely uncomfortable position. For the markets, it means the next month or so could be very volatile for the pound, in particular and with the currency up more than 15% against the dollar since March, there’s plenty of room below if profit taking kicks in.
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