Market Review – Fundamental Perspective 6 December 2017

European and US equity markets finished the day marginally lower yesterday as investors assessed the implications of the proposed US tax cuts. Meanwhile, the US yield curve flattened further, USD had a mixed day and copper prices declined after data showed a build-up of inventories.
Asian equity markets were sharply lower as of midday local time weighed by losses on Wall Street as well as falling metals prices and monetary policy concerns in China.
Brexit negotiations seem to have hit an impasse ahead of the crucial EU summit next week. The Irish border remains one of the most contentious issues as the DUP opposes special regulatory treatment for Northern Ireland
PM May has come under renewed pressure from a number of sources, not least from key members of her own party who fear that she is trying to force through a soft Brexit.
GBPUSD support comes in at 1.3350 with resistance at 1.3550 ahead of the highs of the year in the 1.3660 area. EURGBP support is found at 0.8730-50 with resistance at 0.8860.
President Trump is expected to announce his decision on the location of the US embassy in Israel today and the possible recognition of Jerusalem as Israel’s capital would likely raise geopolitical concerns and weigh on risk sentiment.
UK services PMI for November came in weaker than expected at 53.8 as higher costs weigh on businesses’ margins and their ability to expand. As in previous months, Brexit uncertainties and the household income squeeze are further headwinds to business confidence.

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