European shares rallied to five-month highs on Thursday after Britain's par...
LONDON - European shares rallied to five-month highs on Thursday after Britain’s parliament removed a key source of uncertainty by rejecting a no-deal Brexit though somber economic data and trade fears kept a lid on gains.
The vote paves the way for a delay to Brexit beyond the current March 29 deadline which could lead to an EU divorce deal being agreed or even another referendum.Goldman Sachs analysts told clients the probability of a no-deal Brexit had fallen to 5 percent from 10 percent after Wednesday vote. Despite the vote having no legal force, it carries considerable political force.
He was speaking of the U.S. Federal Reserve which signaled recently that it was pressing pause on rate rises. Some players however reckon it could still raise interest rates one more time before calling time on its tightening campaign. “Before we conclude that this market still has decent legs, we’d like to see equity prices supported by stronger macro data, lifted by better earnings trends, and confirmed by stable-to-rising yields,” David Lafferty, chief market strategist at Natixis, told clients.On currency markets, most action was in sterling which rallied after Wednesday’s vote by more than 1 percent to $1.3380, the highest since June 2018.
“There is gradual optimism being priced in and barring something highly unlikely, the possibility of an actual no-deal is not zero but less than 5 percent,” said Tim Graf, head of macro strategy at State Street Global Advisors.
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