LONDON MARKETS: FTSE 100 Fights For Direction As Investors Assess Trade Official's No-deal Brexit Remark

By Victor Reklaitis, MarketWatch

Analyst: U.K.'s Liam Fox may be 'taking a leaf out of Mr. Trump's book and talking tough'

The U.K.'s main equity gauge switched between small gains and losses early Monday, as traders weighed fresh Brexit posturing and another round of earnings reports.

How markets are performing

The FTSE 100was recently up by less than 0.1% to 7,662.63, after jumping 1.1% in Friday's session (http://www.marketwatch.com/story/ftse-100-jumps-friday-but-remains-on-track-for-weekly-loss-2018-08-03) but still registering a weekly loss of 0.6%.

The British blue-chip gauge is showing a drop of 0.3% for the year to date.

The poundwas buying $1.2973, down slightly from $1.3002 late Friday in New York.

What's moving markets

Liam Fox, the U.K.'s international trade secretary, said in a Sunday Times interview (https://www.thetimes.co.uk/edition/news/liam-fox-says-there-is-a-6040-chance-of-no-dealbrexit-lpsgm2gdf) over the weekend that there is a 60% chance that the country will crash out of the European Union without a deal with the bloc.

Brexit-related worries tend to weigh on the pound, but sterling wasn't down sharply early Monday. However, the British currency is already down about 1% against the dollar in August, and it remains far below the $1.50 level that it was trading around before the June 2016 vote in favor of leaving the EU.

A softer pound can boost the FTSE 100, as the index's multinational companies generate most of their sales in other currencies.

Worries about global trade tensions remained part of the investing backdrop, after U.S. President Donald Trump over the weekend tweeted that American tariffs are "working far better than anyone ever anticipated (https://twitter.com/realDonaldTrump/status/1025830647649247232)." That came after China on Friday threatened (http://www.marketwatch.com/story/china-threatens-new-tariffs-on-60-billion-of-us-products-2018-08-03) to slap tariffs on $60 billion of American goods if the White House goes ahead with its plans to impose new levies on Chinese products.

Meanwhile, China's Global Times newspaper said Beijing is ready to dig in for a "protracted war" (http://www.marketwatch.com/story/us-has-lost-its-mind-over-trade-beijing-ready-for-long-fight-chinese-newspaper-2018-08-06) with the U.S. over trade. Equity strategists have warned that the escalating trade fight could weigh on global economic growth.

What are strategists saying?

"The pound is likely to be in focus today as Liam Fox, secretary for international trade, announced the probability of a no-deal Brexit is 60-40," said David Madden, an analyst at CMC Markets UK, in a note.

"Mr. Fox blamed the EU for the lack of progress on the negotiations. It is possible that Mr. Fox is taking a leaf out of Mr. Trump's book and talking tough, but nonetheless, the prospect of no deal being reached is likely to put pressure on the pound," Madden added.

Stocks in focus

Shares in Just Eat PLC(JE.LN)declined 1.4% for one of the FTSE 100's biggest drops after the food-delivery company posted first-half results. It was a bittersweet period, as the company delivered a profit fall but raised 2018 revenue guidance, a Dow Jones Newswires report said.

Shares in HSBC Holdings PLC(HSBA.LN)(HSBA.LN) dropped 0.4% after the bank said adjusted profit before tax fell (http://www.marketwatch.com/story/hsbc-profit-gets-a-lift-from-retail-banking-2018-08-06).

Tesco PLC's stock (TSCO.LN)(TSCO.LN) edged up by 0.2% after the British grocery chain and French peer Carrefour SA (CA.FR)confirmed they have entered into a long-term strategic alliance (http://www.marketwatch.com/story/tesco-carrefour-confirm-strategic-alliance-2018-08-06), as they hope to use their buying power with suppliers to cut prices.

(END) Dow Jones Newswires

August 06, 2018 04:29 ET (08:29 GMT)

FTSE 100
Index Chart
From Mar 2024 to Apr 2024