AFP: A global stocks rally took root yesterday after strong US jobs data and despite Brexit uncertainty that boosted the pound.
Asian and European equities were spurred higher, extending pre-weekend gains, as Friday’s solid jobs report reinforced confidence in the US economy and helped soothe trade war nerves.
“European stock markets are higher after a strong finish in Asia,” noted CMC Markets UK analyst David Madden yesterday.
“Investors are taking their cues from the Far East and it seems the sell-off in Asia was overdone in the run up to the tariffs being imposed.”
Markets have slumped in recent months on trade war fears and on Friday Washington rolled out tariffs on US $ 34 billion of Chinese goods, sparking retaliatory measures from Beijing.
The British pound meanwhile rose yesterday despite shock news that Prime Minister Theresa May’s Brexit minister David Davis has resigned.
Analysts said the news persuaded many investors that Britain could be heading towards a so-called “soft” Brexit.
Sterling rose above US $ 1.33 to near its highest level in nearly one month.
“Sterling has begun the new week in an upbeat mood with the recent steps towards a more ‘soft’ Brexit buoying the pound which has reached its highest level in almost a month against the US dollar,” said analyst David Cheetham at brokerage XTB.
Davis stepped down over the government’s agreed plan to retain strong economic ties with the European Union after leaving the bloc.
Cheetham added: “A soft Brexit refers to a less hardline approach to the UK-EU separation which would ultimately see the future relationship between the two parties more closely resemble the current arrangement.
“From a market perspective this is deemed favourable for the pound as it would see less disruption and uncertainty as far as the outlook for the UK economy is concerned.”
Davis’ resignation -- along with one of his deputies -- comes two days after the cabinet approved the plan in a bid to unblock negotiations with Brussels.