Stock markets around the world rose yesterday as investors tracked growing optimism that China and the United States will reach a trade deal and as the UK faced more political turmoil with the resignation of three government MPs over Brexit.
Among currencies, the yuan was among the big gainers following a report that the US has called on China to stabilise the unit as part of any agreement between the world's top economic powers.
The pound was lower versus the dollar and euro as British Prime Minister Theresa May headed to Brussels yesterday to renew her quest to reopen the terms of the country's Brexit divorce, but appears headed for disappointment.
With less than six weeks until Brexit day, European Commission president Jean-Claude Juncker has agreed to meet Ms May once again, but EU leaders insist they will not restart negotiations.
In a further blow, three MPs yesterday quit Britain’s governing Conservatives over Brexit, saying the issue had “re-defined” the party and was “undoing all the efforts to modernise it”.
The trio added that they planned to sit in Parliament alongside eight former Labour lawmakers who, also citing their Opposition to Brexit, resigned from the main opposition party this week to form the new Independent Group.
Analysts said the resignation of Tory MPs could help trigger a snap general election in the UK.
“With Jean-Claude Juncker claiming he does not expect a breakthrough during the meeting with Theresa May and three Tory MPs defecting from the party... the pound was in a bad mood,” said Connor Campbell, analyst at traders Spreadex, yesterday.
London’s benchmark FTSE 100 index was higher overall despite a near 16 per cent slump in the share price of British supermarket group Sainsbury’s.
The group’s shares fell after UK regulators warned that a planned mega-merger of Sainsbury’s and Walmart-owned Asda raises “extensive competition concerns” and could spark higher prices and less choice.
Wall Street opened slightly higher, after US President Donald Trump said trade talks with China ‒ which resumed in Washington on Tuesday ‒ were “going very well” but were “very complex”.
He also indicated he could push back the deadline for talks to be concluded ‒ March 1, when US tariffs on Chinese goods are due to more than double ‒ saying it is “not a magical date”.
Observers say that while there are no details about the negotiations the fact they are still talking and that China appeared responsive to the call for yuan stability was good news.