US stock markets rallied yesterday, 28 October after Donald Trump hinted that “phase one” of a trade deal could be signed with Beijing next month. China also boosted markets saying the technical work for a preliminary deal was almost done. The S&P 500 closed at an all-time high of 3,039 points, up 0.55 per cent.
The phase one deal is not exactly what global markets wanted as it does not remove any existing tariffs, but it is a step in the right direction. As the Federal Reserve is expected to cut an interest rate tomorrow by 0.25 per cent, the likelihood of which has been priced at over 91 per cent, the recent rally in US stock markets becomes quite expected, despite decelerating growth and recent weak inflation data from the US and across the globe.
Meanwhile, in Westminster Boris Johnson’s latest attempt to force a December general election was thwarted. The prime minister failed to get the two-thirds majority required by the Fixed-term Parliaments Act yesterday, having only gained 299 votes against the 434 needed.
Today, the House of Commons will hold a second vote on Johnson’s bill, but this time it will require a simple majority of MPs and is far more likely to pass. Johnson has shelved his Brexit Withdrawal Agreement Bill until after any election, after Brussels confirmed a three-month extension to Article 50 until 31 January 2020, to secure the support of the Liberal Democrats and Scottish National Party.
With no top-tier data releases on the ticket today, direction will come from any further details regarding the US-Chinese phase one pact and developments in Westminster.
Macron relaxes extension stance, Lib Dems offer lifeline