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You can find the current article at its original source at https://www.theguardian.com/business/live/2018/nov/06/markets-edgy-us-elections-shares-dollar-eurozone-slowdown-business-live
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| Pound hits two-week high after Brexit 'thumbs-up' - as it happened | Pound hits two-week high after Brexit 'thumbs-up' - as it happened |
| (25 days later) | |
| European stock markets have closed lower tonight, as investors await news from the US elections. | European stock markets have closed lower tonight, as investors await news from the US elections. |
| FTSE 100: down 63 points or -0.9% at 7,040 | FTSE 100: down 63 points or -0.9% at 7,040 |
| German DAX: down 10 points or -0.1% at 11,484 | German DAX: down 10 points or -0.1% at 11,484 |
| French CAC: down 26 points or 0.5% at 5,075 | French CAC: down 26 points or 0.5% at 5,075 |
| The Footsie was held back by the stronger pound, which makes overseas earnings of multinationals less valuable. | The Footsie was held back by the stronger pound, which makes overseas earnings of multinationals less valuable. |
| In New York, the Dow and the S&P 500 are both up almost 0.5% though. | In New York, the Dow and the S&P 500 are both up almost 0.5% though. |
| Fiona Cincotta of City Index says the midterm results will swing the markets tomorrow: | Fiona Cincotta of City Index says the midterm results will swing the markets tomorrow: |
| Surprisingly London traders have been more cautious than their US peers who are awaiting the results of the midterm elections due later tonight. The vote will decide on whether the two US legislative houses remain Republican, like the President, or turn Democrat. The first results for the key swing states are expected around 10pm Eastern time and will colour the trading day Wednesday. | Surprisingly London traders have been more cautious than their US peers who are awaiting the results of the midterm elections due later tonight. The vote will decide on whether the two US legislative houses remain Republican, like the President, or turn Democrat. The first results for the key swing states are expected around 10pm Eastern time and will colour the trading day Wednesday. |
| For all of President Trump’s threats to his foreign trading partners his domestic economic decisions have injected the US stock markets with some vigour, particularly the massive tax cutting programme. A change in the texture of Congress would hamper his capacity to push through decisions that require legislative approval, causing concerns for businesses. However, some dark clouds are already gathering on the economic horizon, as seen by the massive selloff in stocks and bonds in October. | For all of President Trump’s threats to his foreign trading partners his domestic economic decisions have injected the US stock markets with some vigour, particularly the massive tax cutting programme. A change in the texture of Congress would hamper his capacity to push through decisions that require legislative approval, causing concerns for businesses. However, some dark clouds are already gathering on the economic horizon, as seen by the massive selloff in stocks and bonds in October. |
| Goodnight! GW | Goodnight! GW |
| You can keep up to date with all the US midterm election action in our liveblog: | You can keep up to date with all the US midterm election action in our liveblog: |
| Midterm elections 2018: Fox News host Sean Hannity under fire for appearing alongside Trump at rally – live | |
| Over in New York, the US stock market has opened cautiously as midterm voting gets underway. | Over in New York, the US stock market has opened cautiously as midterm voting gets underway. |
| The Dow Jones industrial average has gained 50 points, or 0.2%,. | The Dow Jones industrial average has gained 50 points, or 0.2%,. |
| The S&P 500 has gained 0.3%, while the tech-focused Nasdaq index has gained almsot 1%. | The S&P 500 has gained 0.3%, while the tech-focused Nasdaq index has gained almsot 1%. |
| Despite Brexit secretary Raab’s cheeriness, the British cabinet still haven’t actually agreed the terms of the Irish backstop. | Despite Brexit secretary Raab’s cheeriness, the British cabinet still haven’t actually agreed the terms of the Irish backstop. |
| Theresa May’s spokesman told lobby reporters that an agreement won’t be reached “at any cost”. The key issue is how long the backstop would last (Brexiteers say it can’t be indefinite), and who could end it (Brexiteers want the power to end it). | Theresa May’s spokesman told lobby reporters that an agreement won’t be reached “at any cost”. The key issue is how long the backstop would last (Brexiteers say it can’t be indefinite), and who could end it (Brexiteers want the power to end it). |
| The spokesman said (via our Politics Live blog): | The spokesman said (via our Politics Live blog): |
| [The PM] said that while 95% of the withdrawal agreement had been concluded, on the Northern Ireland backstop there are a number of issues that we still need to work through and these are the most difficult. | [The PM] said that while 95% of the withdrawal agreement had been concluded, on the Northern Ireland backstop there are a number of issues that we still need to work through and these are the most difficult. |
| This includes ensuring that, if the backstop is ever needed, it is not permanent and there’s a mechanism to ensure that the UK could not be held in the arrangement indefinitely. | This includes ensuring that, if the backstop is ever needed, it is not permanent and there’s a mechanism to ensure that the UK could not be held in the arrangement indefinitely. |
| Main conclusion of Cabinet today: UK Govt now working up a backstop review mechanism to propose to the EU, to ensure it isn’t indefinite. | Main conclusion of Cabinet today: UK Govt now working up a backstop review mechanism to propose to the EU, to ensure it isn’t indefinite. |
| But; it appears this will take some time. No10: “Don’t be under the illusion that there isn’t a lot of work to do”. Tick tock... | But; it appears this will take some time. No10: “Don’t be under the illusion that there isn’t a lot of work to do”. Tick tock... |
| Other sources say that Cabinet was told by the Attorney General that the EU’s shift in the last few days to consider an arbitration mechanism is “a major step”. And that went down quite well with the Pizza Club. | Other sources say that Cabinet was told by the Attorney General that the EU’s shift in the last few days to consider an arbitration mechanism is “a major step”. And that went down quite well with the Pizza Club. |
| The pound has also nudged a five-month high against the euro, trading as high as €1.1465. | The pound has also nudged a five-month high against the euro, trading as high as €1.1465. |
| Bloomberg is impressed by the power of Dominic Raab’s thumb to move markets: | Bloomberg is impressed by the power of Dominic Raab’s thumb to move markets: |
| The responsiveness of the pound to headlines may be well documented, but its sensitivity reached new highs Tuesday as it rallied on a mere hand gesture. | The responsiveness of the pound to headlines may be well documented, but its sensitivity reached new highs Tuesday as it rallied on a mere hand gesture. |
| Investors had been waiting for news on progress in the Brexit divorce talks with U.K. Prime Minister Theresa May gathering her Cabinet Tuesday morning. When BBC political editor Laura Kuenssberg tweeted that the Brexit Secretary Dominic Raab had said “thumbs up” on the way out of the meeting, it was enough to send the U.K. currency to the day’s high. | Investors had been waiting for news on progress in the Brexit divorce talks with U.K. Prime Minister Theresa May gathering her Cabinet Tuesday morning. When BBC political editor Laura Kuenssberg tweeted that the Brexit Secretary Dominic Raab had said “thumbs up” on the way out of the meeting, it was enough to send the U.K. currency to the day’s high. |
| “Isn’t it wonderful to be working in a market where a simple thumbs-up moves a currency by 40 pips?” said Jordan Rochester, an analyst at Nomura International Plc. | “Isn’t it wonderful to be working in a market where a simple thumbs-up moves a currency by 40 pips?” said Jordan Rochester, an analyst at Nomura International Plc. |
| The British pound rallies Tuesday on a mere hand gesture: a thumbs up https://t.co/z795saqvab pic.twitter.com/Sr9ZKLmtaV | The British pound rallies Tuesday on a mere hand gesture: a thumbs up https://t.co/z795saqvab pic.twitter.com/Sr9ZKLmtaV |
| The pound has jumped to a two-week high as Brexit speculation swirls. | The pound has jumped to a two-week high as Brexit speculation swirls. |
| Somewhat astonishingly, the rally came after the BBC’s Laura Kuenssberg tweeted that Brexit secretary Dominic Raab had given reporters a verbal ‘thumbs-up’ following a crunch cabinet meeting. | Somewhat astonishingly, the rally came after the BBC’s Laura Kuenssberg tweeted that Brexit secretary Dominic Raab had given reporters a verbal ‘thumbs-up’ following a crunch cabinet meeting. |
| ‘Thumbs up’ - says Raab on his way out of cabinet | ‘Thumbs up’ - says Raab on his way out of cabinet |
| There’s no more detail about exactly what Raab meant -- whether he means progress on the Irish backstop, or simply that he’s still optimistic. | There’s no more detail about exactly what Raab meant -- whether he means progress on the Irish backstop, or simply that he’s still optimistic. |
| But it’s enough to send sterling up to $1.3090, up half a cent against the US dollar, at its best position since 22 October. | But it’s enough to send sterling up to $1.3090, up half a cent against the US dollar, at its best position since 22 October. |
| Pound leaps after journalist tweets about minister doing thumbs up. World. Mad. Gone. Has. https://t.co/52adfdmpex | Pound leaps after journalist tweets about minister doing thumbs up. World. Mad. Gone. Has. https://t.co/52adfdmpex |
| The pound had earlier lost ground after DUP chief whip Jeffrey Donaldson predicted that “we are heading for no deal.” | The pound had earlier lost ground after DUP chief whip Jeffrey Donaldson predicted that “we are heading for no deal.” |
| This rapid rebound suggests the City is extremely anxious for signs that London and Brussels could reach an agreement to avoid the UK crashing out of the EU at the end of March. | This rapid rebound suggests the City is extremely anxious for signs that London and Brussels could reach an agreement to avoid the UK crashing out of the EU at the end of March. |
| Rachel Winter, senior investment manager at stockbrokers Killik & Co,isn’t convinced that a Democratic-controlled House would force peace in the trade wars. | Rachel Winter, senior investment manager at stockbrokers Killik & Co,isn’t convinced that a Democratic-controlled House would force peace in the trade wars. |
| She writes: | She writes: |
| “The President uses the stock market as a barometer of his own success and is clearly keen to keep it at a high level. His plans for further expansionary fiscal policy, for example additional tax cuts and more infrastructure spending, would also have positive consequences for the stock market.” | “The President uses the stock market as a barometer of his own success and is clearly keen to keep it at a high level. His plans for further expansionary fiscal policy, for example additional tax cuts and more infrastructure spending, would also have positive consequences for the stock market.” |
| “There is concern that a Democrat majority in the House would cause governmental gridlock, making it difficult to pass further legislative changes. Further tariffs on China might be difficult to implement, which would potentially be good for emerging markets. That said, Democrats have long been critical of the trade imbalance between the US and China, and many leading Democrats applauded Trump’s tariffs.” | “There is concern that a Democrat majority in the House would cause governmental gridlock, making it difficult to pass further legislative changes. Further tariffs on China might be difficult to implement, which would potentially be good for emerging markets. That said, Democrats have long been critical of the trade imbalance between the US and China, and many leading Democrats applauded Trump’s tariffs.” |
| The New York stock exchange is expected to drop when trading begins in under two hours, as America heads to the polling booths. | The New York stock exchange is expected to drop when trading begins in under two hours, as America heads to the polling booths. |
| The futures market is calling the Dow Jones industrial average down around 50 points, or 0.2%. Yesterday it gained 190 points, so that’s not a major reversal. | The futures market is calling the Dow Jones industrial average down around 50 points, or 0.2%. Yesterday it gained 190 points, so that’s not a major reversal. |
| Cautious traders will be sticking to the sidelines until we have some idea of how the midterm elections have played out. Given recent political shocks, they’ll be treating opinion polls warily. | Cautious traders will be sticking to the sidelines until we have some idea of how the midterm elections have played out. Given recent political shocks, they’ll be treating opinion polls warily. |
| As my colleague Tom McCarthy explains, many scenarios are possible: | As my colleague Tom McCarthy explains, many scenarios are possible: |
| Election night could end with the Republicans retaining their majority in the House of Representatives and strengthening their majority in the Senate, despite a historic exodus of Republicans retiring from Congress, widespread disapproval of Trump and the customary strength of the opposition party at this stage in the elections cycle. | Election night could end with the Republicans retaining their majority in the House of Representatives and strengthening their majority in the Senate, despite a historic exodus of Republicans retiring from Congress, widespread disapproval of Trump and the customary strength of the opposition party at this stage in the elections cycle. |
| Yet some prominent Democrats – starting with the House minority leader, Nancy Pelosi – are predicting a blue “wave” that will deliver a strong Democratic majority to the House. (Predictions of the Senate flipping blue are notably fewer.) | Yet some prominent Democrats – starting with the House minority leader, Nancy Pelosi – are predicting a blue “wave” that will deliver a strong Democratic majority to the House. (Predictions of the Senate flipping blue are notably fewer.) |
| Will the Democrats achieve a 'blue wave' in the midterms? | |
| It’s worth remembering that Wall Street’s interests don’t always run parallel to Main Street’s. | It’s worth remembering that Wall Street’s interests don’t always run parallel to Main Street’s. |
| Indeed, the two thoroughfares can diverge widely when it comes to the state of America, and the global economy. What’s good for The Market isn’t always good for The People. | Indeed, the two thoroughfares can diverge widely when it comes to the state of America, and the global economy. What’s good for The Market isn’t always good for The People. |
| As analysts at FX Pro put it: | As analysts at FX Pro put it: |
| Wall Street has its own interest. | Wall Street has its own interest. |
| Financial institutions fear that a full control by the Democrats over both houses (the House of Representatives and the Senate) could lead to the restoration of the Dodd-Frank Act, which restricts the activities of banks and the abolition of recent tax cuts. | Financial institutions fear that a full control by the Democrats over both houses (the House of Representatives and the Senate) could lead to the restoration of the Dodd-Frank Act, which restricts the activities of banks and the abolition of recent tax cuts. |
| Dodd-Frank imposed new rules on the banking sector to avoid a repeat of the 2008 financial crisis, ending the ‘Too Big To Fail’ scandal. It was partly repealed earlier this year, despite warnings that this would increase financial risks. | Dodd-Frank imposed new rules on the banking sector to avoid a repeat of the 2008 financial crisis, ending the ‘Too Big To Fail’ scandal. It was partly repealed earlier this year, despite warnings that this would increase financial risks. |
| Donald Trump’s tax reforms dramatically slashed the corporation tax rate from 35% to 21%, alongside temporary tax cuts for individuals. That helped to drive stock prices up (as firms became more profitable), but has also pushed America’s budget deficit higher. | Donald Trump’s tax reforms dramatically slashed the corporation tax rate from 35% to 21%, alongside temporary tax cuts for individuals. That helped to drive stock prices up (as firms became more profitable), but has also pushed America’s budget deficit higher. |
| US wages are now rising faster, finally clearing the 3%/year mark for the first time in almost a decade. | US wages are now rising faster, finally clearing the 3%/year mark for the first time in almost a decade. |
| But while the economy is still growing robustly, business investment actually declined in the last quarter, suggesting the tax windfall isn’t being pumped into new equipment, machinery and infrastructure. | But while the economy is still growing robustly, business investment actually declined in the last quarter, suggesting the tax windfall isn’t being pumped into new equipment, machinery and infrastructure. |
| European stock markets are falling deeper into the red as lunchtime approaches. | European stock markets are falling deeper into the red as lunchtime approaches. |
| Britain’s FTSE 100 is now down 43 points, or 0.6%, at 7060. Germany’s DAX and the French CAC are both off around 0.2%. | Britain’s FTSE 100 is now down 43 points, or 0.6%, at 7060. Germany’s DAX and the French CAC are both off around 0.2%. |
| Connor Campbell of City firm SpreadEx blames midterm jitters, as investors wonder whether the Democrats will claim a majority in the House of Representatives: | Connor Campbell of City firm SpreadEx blames midterm jitters, as investors wonder whether the Democrats will claim a majority in the House of Representatives: |
| A tentative start turned resolutely negative as Tuesday went on, investors’ midterm election nerves perhaps becoming more pronounced as voting gets underway. | A tentative start turned resolutely negative as Tuesday went on, investors’ midterm election nerves perhaps becoming more pronounced as voting gets underway. |
| Brexit worries are also weighing on traders’ minds, as Theresa May struggles to reach an agreement over the Northern Ireland backstop that will satisfy Brussels and her own cabinet. | Brexit worries are also weighing on traders’ minds, as Theresa May struggles to reach an agreement over the Northern Ireland backstop that will satisfy Brussels and her own cabinet. |
| A senior member of the DUP (who are supporting May’s government) has predicted that Britain would leave the EU without a deal. | A senior member of the DUP (who are supporting May’s government) has predicted that Britain would leave the EU without a deal. |
| Looks like we’re heading for no deal. Such an outcome will have serious consequences for economy of Irish Republic. In addition, UK won’t have to pay a penny more to EU, which means big increase for Dublin. Can’t understand why Irish Government seems so intent on this course. https://t.co/1L4WF1n85N | Looks like we’re heading for no deal. Such an outcome will have serious consequences for economy of Irish Republic. In addition, UK won’t have to pay a penny more to EU, which means big increase for Dublin. Can’t understand why Irish Government seems so intent on this course. https://t.co/1L4WF1n85N |
| Many Americans have already made their choice of senator, congressman or woman, or governor, of course. | Many Americans have already made their choice of senator, congressman or woman, or governor, of course. |
| Early voting has been particularly brisk, suggesting the overall turnout at these midterms could be sizzling high as both sides push hard to get the vote out. | Early voting has been particularly brisk, suggesting the overall turnout at these midterms could be sizzling high as both sides push hard to get the vote out. |
| Early voting turnout surging in several key states six days before midterms | |
| The polls are open, meaning early-rising Americans on the east coast can cast their ballots. | The polls are open, meaning early-rising Americans on the east coast can cast their ballots. |
| #BREAKING Polls open in eastern US states for crucial midterm elections pic.twitter.com/zS2TxifnN2 | #BREAKING Polls open in eastern US states for crucial midterm elections pic.twitter.com/zS2TxifnN2 |
| It’ll be hours until we get any exit polls, though. Most polling stations stay open until at least 7pm local time (so midnight onwards for UK readers). | It’ll be hours until we get any exit polls, though. Most polling stations stay open until at least 7pm local time (so midnight onwards for UK readers). |
| US midterms: key races to watch, when to expect results and how to follow |