Stock Indices up EU wide
Euroland stock traders are wallets drawn and buying today as the likelihood of a Brexit train wreck receded a bit. Despite the likely accession to the Tory leadership job and hence the Prime Ministership for the febrile Boris Johnson next week, the new Commissioner of the European Commission, the EU Executive, Ms. Von Der Leyen soothed concerns that the feared hard Brexit will happen. Rather, she attempted to quell these concerns by stating that she was receptive to extending the deadline for the UK departure to facilitate a smooth recalibration of the EU where it affected the UK. It is not clear that the euphoria will last, but euphoric the stock markets are today.
The Amsterdam stock market Index is up more sharply than others in positive developments in Euroland equity markets today. The possibility that the deep and long entrenched fear of a hard Brexit train wreck scenario can recede has made equity traders giddy. And for good reason. The hard Brexit scenario is a disaster for not only the British people and their economy but also no less so for the Eurozone. The trade flows between the EU and the UK are enormous and the damage potential for a non-negotiated departure is no less enormous for both parties.
A small oil tanker that had gone missing in the Persian Gulf had technical difficulties and was towed into Iranian waters for repairs, an Iranian foreign ministry official said, according to the ISNA news agency. This has, for the time being brought crude prices further down below the important 60 level. It is a welcome development but hardly ameliorates the terrific tensions that have been joined in the Gulf region. So long as the US continues to disallow all but food and medicine to be bought and sold in Iran, through its stiff sanctions regime, the Iranians will continue to lash out at the strictures imposed on them. Eventually they will react in a way that causes the larded tinderbox to ignite. In the meantime, the Iranians are not falling into the trap set for them by America and the oil price reflects their skill at playing the high stakes game of chicken.
The EURGBP long position continues to hold as the value of Sterling continues to fall in Euro terms. This has been the case for over four months as the realignment of the UK currency continues resulting from the decision to exit the European Union. A fateful decision that has sent the currency markets as well as the stock markets, – not to mention the fortunes of many corporations doing business from and with London – into hyperactive drive. While Ms. Von Der Leyen’s ascension is welcome, particularly her conciliatory tone, the trends of the past three years are still in train and not likely to reverse immediately and as one.