Investing.com - Here are the top five things you need to know in financial markets on Monday, January 16:
1. Sterling sinks to lowest level since October flash crash
The British pound tumbled to the lowest level since October’s flash crash on Monday, following media reports that suggested Prime Minister Theresa May's government was prepared to make a "clean and hard" exit from the European Union, ahead of her speech on Tuesday.
The pound fell by as much as 1.5% to hit lows of 1.1988 in early trade, a level not seen since the flash crash of early October. It was last at 1.2059 by 5:55AM ET (10:55GMT), down around 1% on the day (GBP/USD).
The euro gained 0.5% to 0.8781, well off a session high of 0.8852 (EUR/GBP), while sterling sank 1.25% against the yen to 137.74, recovering after hitting a daily low of 136.47 (GBP/JPY).
The currency pared losses after a Downing Street spokeswoman said talk of a hard Brexit was "speculation."
2. Global stocks mostly lower
European equities were lower in mid-morning trade, as investors await more detail on the U.K.'s Brexit plan and the inauguration of President-elect Donald Trump in the U.S. later this week.
Earlier, in Asia, markets ended broadly lower, with the Shanghai Composite in China closing down 0.3%, while Japan's Nikkei slumped 1%.
U.S. markets will be closed Monday for the Martin Luther King holiday, a factor analysts said would likely limit global trading volumes.
3. Gold climbs to 8-week high
Gold prices started the week higher, rallying to the strongest level in around two months with investors spooked by concerns over Britain's exit from the European Union, while U.S. policy uncertainty lingered ahead of President-elect Donald Trump's inauguration.
Prices of the yellow metal touched a session peak of $1,208.70 a troy ounce, a level not seen since November 23. It last stood at $1,202.15, up almost $6.00, or 0.5%.
4. German automakers slump after Trump warning
Shares in German carmakers BMW (DE:BMWG), Daimler (DE:DAIGn) and Volkswagen (DE:VOWG_p) all fell about 2% after U.S. President-elect Donald Trump warned he will impose a border tax of 35% on vehicles imported from abroad to the U.S. market.
In an interview with German newspaper Bild, published on Monday, Trump sharply criticized the German carmakers for failing to produce more cars on U.S. soil.
All three carmakers have invested heavily in factories in Mexico, where production costs are lower than the United States, with an eye to exporting smaller vehicles to the U.S. market.
5. Luxottica , Essilor merge, creating eyewear giant worth €46 billion
Italy's Luxottica Group (MI:LUX) and France's Essilor (PA:ESSI) have agreed a €46 billion ($49 billion) merger to create a global powerhouse in the eyewear industry with annual revenue of more than €15 billion, they said in a statement on Monday.
The deal, one of Europe's largest cross-border tie-ups, brings together Luxottica, the world's top spectacles maker with brands such as Oakley and Ray-Ban, with Essilor, the world's leading manufacturer of ophthalmic lenses.
Shares were soaring 9% and 14%, respectively.