A break up is never easy and that’s what the markets are struggling with this morning. Theresa May’s speech yesterday has shaken the market. Although, indices have rebounded slightly, Cable is moving downwards after enjoying a rally on the back of May’s speech.
The Asian Market
Asian Markets were lower yesterday after British Prime Minister Theresa May announced that Britain would be leaving the single market.
Fears circulating around what Brexit really means for trade caused investors to shy away from Asian markets. The Nikkei 225 index lost about 0.6% following May’s speech. It has now regained some of those losses, up 0.2%, trading at ¥18805. The S&P 200 was down 0.8%, it has rebounded slightly, trading upwards 0.9%, trading at $2264.50.
China’s President Xi Jinping opened the World Economic Forum in Davos yesterday to promote globalisation. Nationalist and populist movements will hurt trade with China. The nation is worried about barriers to trade arising from the western world.
“Pursuing protectionism is like locking oneself in a dark room… No one will emerge as a winner in a trade war.” – President Xi Jinping
The UK Market
Cable is down 0.6% this morning, trading at $1.23. The pound has lost momentum following May’s speech. The current trend of GBPUSD is directly related to May’s Brexit priorities. Repeatedly reminding the market that there will be a ‘global Britain’ and that the nation is still a part of the European mindset, that they remain ‘friends’. The final Brexit deal, made with the European Union, will be put to parliament to vote on, which eased investor’s concerns.
FTSE was down 1% as investors fear that a stronger pound could hurt exports. The index is recovering slightly, trading 0.09% higher at £7153.50
The US Market
Trump’s comments that the dollar is overvalued sent USD currency pairs lower yesterday. US stocks also suffered from the statement, trading lower on Tuesday.
During the beginning of the year, the dollar was caught in a horizontal trend. In the week of Trump’s inauguration, the dollar could be correcting itself from the gains seen in the fourth quarter of 2016. A decline in bond yields is also a concern for investors. The 10-year Treasury prices dropped 2.3%, the lowest level in seven weeks.
Political news dominated the market, overshadowing earning releases so far.
Market Watchlist
Big Pharmaceutical companies could be under serious constraint once Donald Trump takes the oval office. Eighteen million people in the US could become uninsured in the coming year and premiums could shoot up.
Last week, congress approved a budget that accelerates the time it takes to repeal the heath care law. However, with no concrete replacement bill, the repeal could be a disaster for millions of healthcare recipients.
- Watch out for Pfizer (NYSE:PFE) and Perrigo in the next coming weeks.
Pfizer 
Perrigo 