It’s a quiet start to the week with US markets shut for the Martin Luther King Jr holiday. However, as usual there will be enough for traders to watch, with the UK Prime Minister Theresa May expected to outline her latest proposal for the Brexit deal.
What may surprise many is the strength of the pound so far this year, given the pantomime that UK politics appears to be. Last week saw the pound briefly hit 1.30 against the US dollar, its best level in two months. It looks like markets are expecting something better than the “No-Deal” Brexit. The pound could well continue to wrong-foot traders in the weeks ahead and further gains are possible.
Stock markets have been the other surprising market in early 2019. December was a terrible month for major indices, but so far in January this has been shrugged off and stocks around the world are posting a strong start. In the US, the S&P500 finished last week up by more than 6% for the year to date. It still feels as if equities are vulnerable to the continued slowdown of the world economy this year – but for now at least momentum is strong.
The other top-performing market has been oil. Last week saw it finish off at a one month high and some investors continue to speculate that the major slide that saw it almost halve in value since October is over.