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FTSE 100 rallies on weakening pound
On Wednesday, Britain’s key stock index managed to ascend because the benchmark was backed by a weakening pound against the backdrop of lingering worries as for the country’s escape from the European Union.
Concerns about so-called Brexit put pressure on Britain’s currency and market participant’s mood. However, the pound’s weakness gave some boost to businesses doing business abroad.
The FTSE 100 leapt by 0.6% demonstrating an outcome of 7,762.23 having leapt by 0.7% in the previous trading marathon, putting the UK equity gauge on track to report a fourth straight profit as well as its most impressive gain since May 24.
The currently pair GBP/USD tumbled to a value not observed since August of 2017.
So far this week the UK blue-chip gauge has ascended by 1.3% that would mark its greatest weekly jump since May 11.
It’s apparent that a weakening pound can help the sale and profits of UK companies that run business overseas.
Remarks from trade minister Liam Fox had generated fresh concerns regarding Brexit, after the statesman put the likelihood of a so-called tough Brexit at about 60%, and without any firm plan, which would outline the future relationship between Great Britain and the European Union.
On Tuesday, America came up with a list of $16 billion in China’s products, which are going to be subject to 25% duties. It actually slaps tariffs on the Asian country’s duties set to come true on August 23, to about $50 billion. American statesmen told they’re considering extra tariffs on $200 billion.
Market participants are afraid that an intensifying conflict between the two major economies around the globe will heavily affect other economies. However, market participants appreciated the fact that the American economy is currently in a decent shape.
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Poor US data, slow vaccine distribution, rising virus cases worsened the market sentiment and underpinned safe-haven currencies like the USD, and JPY.
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.