The stock markets had a very bad day yesterday, but they’ll be quiet today for the national day of mourning. The pound rose on Brexit hopes and the publishing of legal advice.

Calm after the storm

U.S. stocks dropped sharply on Tuesday as enthusiasm around the U.S.-China trade truce disappeared.

The Dow fell 3.5%, the S&P 500 dropped 3.2% and Nasdaq declined 3.8%. Bank stocks and big tech stocks like Apple and Google took significant hits.

European and Asian equities followed suit Wednesday morning, declining but not as much. The U.S. market will be closed Wednesday for the national day of mourning for President George H.W. Bush.

The dollar was relatively steady against its major peers as there was a general calm in the markets. EUR/USD pair hovered around 1.135 after hitting as high as 1.141 Tuesday and as low as 1.131 Wednesday morning.

Part of the calm is credited to a Chinese response to the current trade truce.

China acknowledges Trump-Xi agreement

After two days of uncertainty and questions about what was agreed upon between President Trump and President Xi Saturday, China has officially acknowledged the meeting as a success, although the terms are still murky.

The Chinese Ministry of Commerce confirmed that is working toward a 90-day timetable, and will begin implementing what was agreed upon, limiting the specifics.

It’s being reported that China is preparing to restart imports of soybeans and liquefied natural gas.

As far as next steps, a tweet by President Trump Tuesday has left that up in the air, saying there will be “a REAL DEAL with China, or no deal at all.” He added, “Ultimately, I believe, we will be making a deal – either now or into the future….”

Pound still fluctuating

The pound is still rising a falling with the slightest Brexit headline.

The GBP/USD pair hit 1.283 Tuesday, before dropping to 1.267 later in the day. The pound rose Wednesday after Prime Minister Theresa May released documents containing legal advice around Brexit. There is also more optimism that a hard Brexit will not happen.

The legal advice, from Attorney General Geoffrey Cox, says that the backstop will keep Northern Ireland in the E.U. customs union.