Both the market exuberance and trepidation can be traced back to the Federal Reserve’s flip-flop on whether to raise interest rates. Analysts say the Fed’s U-turn shows that the world’s top economic minds see danger.
Global growth is slowing to a halt in much of Europe and Japan; and Canada, Australia and New Zealand may be headed into a recession this year. Central banks and international aid institutions like the IMF are issuing warnings and writing down growth expectations around the globe.
While the political drama of last week has largely calmed, investors worried anew about UK Prime Minister Theresa May’s struggle to get her draft Brexit deal passed in Brussels and at home, with banks bearing the brunt of the selling.
A warning from the Bank of England that the economy could plunge into a crisis not seen since the 1970s in a “no deal” scenario reinforced those concerns, as companies including mid-cap lender CYBG (CYBGC.L) and Electrocomponents (ECM.L) began triggering contingency plans.
BREXIT – The Financial Times Stock Exchange 100 (FTSE) slips on Brexit and trade war fears