Investors poured into U.K. markets on the first full day of trading since a Brexit deal ended years of uncertainty weighing over the nation’s economic future.
The pound climbed, the FTSE 100 Index rose the most in nearly two months and long-dated sterling corporate bonds led peers on Tuesday. Investors are mostly casting aside concerns for now about the agreement, which won’t extend to the financial industry or the U.K.’s critical services sector.
It was the first market open for U.K. stocks and bonds since Britain and the European Union finalized their future trade relationship on Thursday, avoiding the risk of a chaotic divorce this week. Confidence across markets was also spurred by an agreement on U.S. stimulus.
“I would expect U.K. assets to outperform and the pound too, although the deficiencies of the deal are being highlighted by everyone,” said Mark Nash, head of fixed income alternatives at Jupiter Asset Management.
A trade deal avoided a worst-case scenario for the U.K. economy, which would have subjected it to World Trade Organization terms and knocked around 1.5% off gross domestic product next year, according to Bloomberg Economics.
