This week, despite the escalating trade war with China and a growing possibility of an actual war with Iran, US markets largely shrugged off rising uncertainty. While we are advocates for ignoring the noise and focusing on the long term, this still seems unusually zen. While it’s possible that the erratic behaviour of President Trump is now fully priced in, it could also be that the market has now become complacent and is too heavily discounting anything serious happening. The latter is more likely, which means a violent reaction to these events could still be on the cards if expectations shift.
Elsewhere the markets had no illusion about the direction of Brexit talks between the government and opposition, as the pound hit a three month low against the dollar. Reports are that the whole exercise has been futile, with May refusing to acknowledge the realities of the Irish boarder and Corbyn refusing to acknowledge what decade it is. While most are now expecting Theresa May to be gone in July, we still think she has a plan to cling to power. Expect some convoluted parliamentary shenanigans when she brings her bill back to the commons next month.
Read what the team at FE consider to be significant over the current week.