Tech stabilises after Thursday sell-off
A relatively tame end to an otherwise wild week in financial markets, which saw tech volatility resume while the pound had its worst week since March on Brexit uncertainty.
The late sell-off in tech stocks on Thursday came just as the sector appeared to be finding its feet again and served as a warning that one week of sharp declines doesn’t necessarily mean the correction is complete.
The long weekend last week didn’t bring any reprieve for the sector, with the sell-off accelerating on the open Tuesday before steadying on Wednesday. Monday will be very interesting. Ultimately, I don’t think interest has waned in these stocks but with the US and UK among those encouraging people to return to work and much of Europe already seeing much higher attendances, the pandemic hype around these stocks may have passed.
That said, we’re facing a tough winter when experts believe cases and deaths will dramatically spike once more and that will bring with it more restrictions. We’re much more prepared for it this time and we’re unlikely to see full scale lockdowns again but that may spur more interest again.
Sterling headed for worst week since March, despite trade deal with Japan
What a week for the UK. Brexit talks have gone horribly, with the UK government’s decision to introduce the Internal Market Bill into Parliament frustrating not just Brussels but members of Boris Johnsons own party.
With specific pieces of the legislation effectively undermining the Withdrawal agreement signed only this year, trust between the two sides has hit rock bottom. This may jeapardise more than just a UK-EU trade deal and may end up being the Prime Ministers next embarrassing u-turn.
On a more promising note, the UK signed a trade deal with Japan, its first post Brexit agreement. The news was welcome after weeks of uncertainty. It didn’t give the pound much reprieve though as it suffered its worst week of trading since March.
The Brexit no-deal risk premium is back in the picture, not to mention the levels of volatility we’ve become very accustomed to over the last four years.
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