Since last Friday, stock exchanges all over the world have been booming. For example, the Dutch, German and French stock exchange indexes all increased with about 1 per cent. The UK index even reached a 1,9 per cent increase. There are several events that could explain this phenomenon.
One of the reasons for these massive increases are the UK election results. The results of this election got rid of a lot of uncertainty that surrounds the Brexit situation. The big victory of Boris Johnson got him the majority of seats in the British parliament. This is the largest majority the Conservative party has obtained since Thatcher. This makes it almost completely certain that Britain will leave the European Union soon and the tough process of Brexit will soon come to an end. Last months, there was a lot of uncertainty on the topic and in parliament it was a mess. After these election results, we almost certainly know where the UK is heading. This event also explains why the UK index has increased even more than others.
The election results were also evident in changes of the British currency. The British Pound appreciated against the US Dollar and reached its highest level since the summer of 2018.
Another factor that could have influenced the stock exchange are the meetings between the US and China. The recent negotiations between the two countries might have finally come to a result. According to various American media reports they have succeeded in getting to a trade agreement. The agreement that deals with the lifting of tariffs could mean an end to the trade war that has been going on for the last year. The whole world economy has been slowed down by this conflict and this agreement will stimulate the economy again.
Consequently, it seems that Friday the thirteenth wasn’t that bad this time. At the moment, the stock exchanges indexes are still increasing. It also left me wondering about the future. What will happen to the stock exchange when the Brexit deal is done and the trade agreement between China and the US is official? Will there be even larger increases than these?
By: Jesse Derks