LONDON MARKETS: FTSE 100 Sinks A Second Session In A Row As Pound Gains Momentum
October 23 2018 - 5:55AM
Dow Jones News
By Mark DeCambre, MarketWatch
Global equity rout takes hold
U.K.'s main stock benchmark on Tuesday traded firmly lower,
along with other major European bourses, as questions about Brexit
tensions and growing concerns about global growth, particularly in
China, knocked markets lower.
Doubts about Prime Minister Theresa May's ability to lead the
U.K. toward an orderly exit from the European Union, if at all,
headlined concerns for British investors. A pickup in strength in
sterling against the pound added to pressure on U.K. multinational
corporations.
How markets are performing
The FTSE 100 traded off 0.9% lower at 6,977.63, after closing
out Monday's trade in the red. The benchmark is on track to fall
four of the past five sessions.
The British pound rose to $1.2997, compared with $1.2966 late in
New York on Monday.
What's moving markets
According to the Financial Times
(https://www.ft.com/content/7abd4e96-d613-11e8-ab8e-6be0dcf18713),
the EU's Chief Brexit Negotiator Michel Barnier was advocating a
softening of language related to a border in Northern Ireland,
which has proved a roadblock to forging a trade deal with Britain
as its attempts to exit from Europe's trade bloc.
Northern Ireland has been a sticking point in trade negotiations
because the territory is part of the U.K. while the Republic of
Ireland is an EU member.
The latest developments come as May has been fighting for her
job as members of her own party have grown frustrated over Brexit
efforts. Some, however, believe that the prime minister will find a
way to emerge from this political turmoil and secure a Brexit
pact.
Contributing to Tuesday's woes were Asian concerns. China's
Shanghai Composite Index declined a day after enjoying one of its
biggest single-session gains in more than two years, renewing fears
that the second-largest economy in the world may not be able to
stave off an economic slowdown that has been exacerbated by trade
spats with the U.S.
China is a big user of natural resources, and negative news from
that country can hurt the FTSE 100's mining constituents.
What are strategists saying?
"There's no specific headline driving [British pound] price
action this morning, the domestic political risk subsiding for a
day is not enough to say "everything's fine." Always remember that
the political commentariat operate on short news cycles and
sometimes in doing so miss the bigger picture," wrote Jordan
Rochester, strategist at Nomura, in a Tuesday research note.
"It does show that our view that this was just noise and Theresa
May will find a calculated way through was probably the right one,"
he said.
Stocks in focus
Shares of St. James's Place PLC(STJ.LN) lead losses, down 4.3%,
on the FTSE 100
Gambling operator GVC Holdings PLC's stock (GVC.LN) was among
the worst performers on the session, off 4.2%.
Shares of British American Tobacco PLC (BATS.LN) rose 1.8%,
adding to sharp gains on Monday. Meanwhile shares of miner
Fresnillo PLC(FRES.LN) advanced 3.3%.
(END) Dow Jones Newswires
October 23, 2018 05:40 ET (09:40 GMT)
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