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Monday 14:30 BST
What you need to know
● Dow touches fresh record high as equities rally gathers pace
● Pound holds above lows as formal Brexit talks begin
● Dollar finds momentum against major rivals
● French stocks higher after Macron dominates elections
● Oil prices turn higher on the day
“The launch of Brexit talks, after hard positioning on both the UK and EU sides, a tumultuous UK general election, and the growing threat of radical extremism, underline a difficult market calculus between (hard to price) political disruption and (hard to forecast) future economic tail risks,” says Lena Komileva at G+ Economics.
“While Brexit visibility will remain elusive, the arrival of ‘Macron-omics’ in France, on a platform of a more cohesive EU, and Europe’s success in fighting off populism and preventing Grexit, mean that geopolitics will shape investor views on the relative attractiveness of economic yield. In the heat of summer trading, the gravity of market liquidity and economic visibility will remain key for investor flows.”
The extent to which the Brexit talks have any day-to-day influence on the market will become clear in the days and weeks ahead as negotiators from the UK and the EU seek to draw up departure terms.
The pound is steady on the day against the euro at £0.8757 on the first day of the negotiations, within levels established over the past three sessions. It remains off the seven-month low it touched against the shared currency a week ago, on worries about political instability in Westminster in the run-up to the talks.
Against the dollar, sterling is down 0.1 per cent at $1.2768.
On equities markets the FTSE 250, the mid-cap equity index seen as more representative of the domestic UK economy, is up 0.1 per cent, led by Ocado, the food delivery business seen as a potential target amid bid activity among food retailers. The FTSE 100, home to a range of multinationals that benefit from sterling weakness, is up 0.6 per cent.
The Dow Jones Industrial Average rose to a new high in opening trade of 21,457.19, up 0.3 per cent on the day. Apple is the 30-constituent benchmark’s best single gainer, up 1.6 per cent. The broader S&P 500 is up 0.4 per cent at 2,443.23, just shy of its record of 2,446.20 set 10 days ago.
The international Euro Stoxx 600 is up 0.8 per cent, with the Xetra Dax 30 in Frankfurt up 1.1 per cent at 12,874.22 taking it back toward its record high of 12,921.14 hit on June 14.
In Japan the broad Topix benchmark rose 0.6 per cent while in Hong Kong the Hang Seng index added 1.2 per cent. China’s Shanghai Composite is up 0.7 per cent while the tech-focused Shenzhen Composite added 0.6 per cent. Investors were turning their attention to a decision due on Tuesday by MSCI on whether to include China A-shares in its globally tracked emerging markets index.
The dollar is picking up momentum as full US trade begins. The dollar index, measuring the US currency against a basket of global peers, is up 0.2 per cent at 97.293, having pulled back in the wake of the Federal Reserve’s decision last week to raise interest rates.
The euro is down 0.2 per cent against the dollar at $1.1180.
The Japanese yen is 0.4 per cent weaker at ¥111.26 per dollar after data showing imports and exports grew by less than expected in May.
Oil prices are bouncing back, with Brent crude, the international benchmark, up 0.6 per cent at $47.63 a barrel and West Texas Intermediate up 0.3 per cent at $44.87.
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