European stock markets jumped yesterday, while the pound won a lift from better-than-expected UK jobs data, as traders reacted to more Brexit chaos and awaited the Federal Reserve’s latest policy meeting.
British Prime Minister Theresa May held crisis talks with her ministers after the Speaker of Parliament threatened to derail her EU withdrawal plan just 10 days before Brexit day, leaving her strategy in tatters.
British economic fallout from Brexit clouds was however offset by official data showing that the UK unemployment rate has struck a 44-year low at 3.9 per cent, while wages continue to outpace inflation.
“It appears that the labour market is still remarkably in rude health despite the ongoing calamity surrounding Brexit,” noted David Cheetham, chief market analyst at XTB trading group.
In terms of market reaction there has been a little pop higher in the pound
“In terms of market reaction there has been a little pop higher in the pound, but the markets remain far more concerned with the latest on the Brexit front.”
In the eurozone, Frankfurt’s stock market powered ahead almost one per cent as a survey showed confidence among investors in Europe’s largest economy Germany leaped in March, as fears of a hard Brexit briefly receded earlier this month and progress in US-China trade talks soothed nerves.
The ZEW institute’s monthly confidence index yesterday added 9.8 points for a reading of -3.6 – still in negative territory, but picking up the pace of recovery from a deep trough the indicator plumbed in October and November.
It comes as German Chancellor Angela Merkel yesterday said she would struggle until the last possible moment to achieve an orderly Brexit, saying the interests of Germany, Britain and the EU were at stake.
Focus yesterday turned also to the US central bank and its interest rate plans.
The Fed is widely expected to hold fire today on another hike, with observers predicting it will opt for just one increase this year as opposed to the two previously tipped, amid global growth weakness and United States-China trade tensions.
Oil prices, meanwhile, climbed yesterday, one day after major oil producers led by Saudi Arabia agreed to keep working together to prop up the market, but said they would decide only in June on whether to extend production cuts.