Stocks, UK pound gain on hopes for a Brexit deal

Stocks, UK pound gain on hopes for a Brexit deal

Bourses in Paris, Frankfurt and London all gained around one per cent or more

Representative Image. Credit: Reuters Photo

Global stock markets mostly rose Wednesday along with the pound as Britain and the European Union edged closer to a post-Brexit trade deal and markets shrugged off comments from President Donald Trump that threatened to derail a giant US economic relief package.

After months of torturous negotiations between London and Brussels, a definitive breakthrough seemed close, as EU chief Ursula von der Leyen and Britain's Prime Minister Boris Johnson took control of the talks.

"We are in the final phase," one EU official told AFP. Asked whether this meant a deal later Wednesday, a source close to the talks said: "Very likely, yes."

Bourses in Paris, Frankfurt and London all gained around one per cent or more.

Oil prices also rose rebounding from big losses suffered earlier this week following a US oil inventory report showed lower supplies.

The pound got a boost against the dollar "after France reopened routes with the UK and on hopes that Brexit negotiators will be successful in delivering a last-minute trade agreement," said Edward Moya, a senior analyst at the online broker Oanda.

Back in the US, Trump rejected a $900 billion economic relief package and called for stimulus payments to be lifted to $2,000 from $600, raising the possibility he could veto the long-debated measure.

Investors looked past the risk the stimulus bill could die and instead focused on the possibility of a richer package.

"If there's any change, it's to make the bill more stimulative," said Art Hogan, chief market strategist at National Securities, adding that after four years of watching Trump, markets are accustomed to "watching what he does not what he says."

"Nobody on either side of the aisle wants to go back without delivering something," Hogan said.

Analysts also cited a boost from the announcement of a US reached agreement to purchase an additional 100 million doses of the Pfizer/BioNTech vaccine against Covid-19.

Still, a flurry of new data provided more evidence the US economy is faltering as Covid-19 cases have spiked.

Consumer confidence fell as incomes and spending declined, and new home sales slumped, according to government and private data.

While new applications for US jobless benefits fell by 89,000 last week after two weeks of increases, they remain high and have risen in four of the past six weeks, the Labor Department reported.

The trove of data was "not nearly as great as hoped for," economist Joel Naroff said in an analysis.

He pointed to the drop in personal income as the most troubling sign, saying "it is clear that people are not replacing their government welfare payments with private sector income."