After both the ECB President and EU President said the likelihood of a hard Brexit is increasing, the OECD has released its assessment that estimates a separation from the bloc without an agreement would push the UK into recession. Three countries to get affected by this most severely owing to the volume of trade with the UK are Ireland, France and Germany.
The OECD said UK exports could plummet by 8% almost immediately and companies on both sides could hit the brakes on business spending. Yesterday, the Bank of England Governor said Brexit uncertainties were causing low inflation in the UK.
Investors went back into risky assets after Wednesday’s quarter point rate cut by the Fed, pushing the S&P 500 index within striking distance of a record close. However, investors were slightly disappointed that the Fed had not included a stimulus program in its announcement, as Jerome Powell described the U.S. economy as slowing down but healthy. Oil followed suit as the WTI climbed 1% to 58.69 a barrel. Meanwhile, indexes in Europe were all in the green on Thursday.
On Thursday, markets are expected to grow after the U.S. released two positive economic readings. Existing home sales rose 1.3% in August, whereas the Philadelphia Fed Index registered a 16.8 in August, overcoming the expectations of 10.