Market round-up: Brexit, sterling, bitcoin and FAANGs

With the pound back above $1.34 this week for the first time since September, there's been little love for blue-chip exporters. The FTSE 100 did stage a quick recovery mid-morning, but there is extra risk associated with buying these heavyweights currently.

Attention yesterday shifted to the FTSE 250 and to stocks which rely more on the domestic economy than overseas, although selling was more broad-based early Thursday.

Movements in the pound will remain a big driver of share prices. Retailers like Next and M&S will benefit from lower import costs, and a strong economy is good both for housebuilders and the banking sector whose margins improve as borrowing costs rise.

Solid companies like these are currently among the cheapest and highest yielding stocks around and will outperform if there's a whiff that Britain can secure a fair Brexit deal.

Optimism that our Brexit negotiators can do a deal at December's summit and move onto crucial post-Brexit trade talks, is greater now than it has been. Logically, given agreement will cause likely trigger further appreciation in the value of the pound, investors who think it's a done deal will keep selling blue chips and buy the mid-cap index.

But this could easily be just a temporary boost for sterling. Agreeing a divorce bill with the EU is one thing, finding a solution to the Irish border problem is quite another. Negotiations have a long way to go, and businesses still have little choice but to make contingency plans for a hard Brexit, which means less investment until we get greater clarity on the likely outcome.

Reports this morning showing economic and consumer optimism at their lowest since summer 2016 confirm businesses and households need more convincing.

Expensive tech stocks fell sharply overnight because hopes of US tax reform make financial stocks more attractive, but this decline needs to be put in context. All market rallies have blips, and it's still too early to call the end of this one.

The America tech sector is still the easiest place for UK investors to get access to major investment themes and mega-trends. Don't write it off just yet, there are still plenty of investors eager to own Apple, Amazon and Netflix, and sell-offs are regularly treated as a buying opportunity.

Believe in it or not, bitcoin is worth over $10,000 again. Cryptocurrency land's extreme volatility is like catnip to high-risk traders, and even traditional investors are dipping their toe. Given there's no logical way to value them with any accuracy, this remains Wild West stuff.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.