The pound is sitting at multi-month lows against the dollar and euro as investors fret over a row between Britain and the European Union that could scupper their trade deal
London (AFP) - World stock markets inched cautiously forwards Friday as European traders mulled Britain’s increasingly acrimonious war dance with the EU.
The Dow ticked up a 0.6 percent gain but the tech heavy Nasdaq was flat more than two hours into the session while European indices stayed largely put.
After increasingly tetchy sparring between Britain and the European Union raised the prospect they will not reach a post-Brexit trade agreement London’s benchmark FTSE 100 barely dragged itself into positive territory.
On the plus side for British industry, a stuttering sterling – which hauled itself off multi-month midweek lows – has been helping to boost share prices of the index’s multinationals earning in dollars while there was some cheer after it emerged a trade deal has been agreed with Japan.
But on the minus side, with the virus ‘R’ transmission rate rising again, the second city of Birmingham announced new coronavirus restrictions.
Regarding relations between Brussels and London, “I wouldn’t be surprised that after huffing and puffing, one of the two parties blink and agree to some compromise in the coming weeks. The pound could strengthen sharply if investors realise they have overreacted to this week’s events, said Fawad Razaqzada of ThinkMarkets.
After Thursday’s sterling selloff, the British unit was stable at $1.2802 to the dollar amid news the UK economy expanded 6.6 percent – albeit still well off pre-coronavirus levels.
“Ultimately UK investors will probably thank the UK government for pushing down sterling and allowing the FTSE the room to recover 6000 (points,” said Chris Beauchamp, chief market analyst at IG.
“Given time, however, we can expect the index to return to its dismal ways, as the global investing community picks the more solid performers on Wall Street over an increasingly fraught UK outlook.”
Britain earlier said it had secured its first major post-Brexit trade agreement – a free trade deal with Japan worth £15.2 billion ($19.5 billion, 16.5 billion euros) – amid its bitter wranglings with the European Union.
Taking a transatlantic view, David Madden of CMC Markets said “traders are still monitoring the health crisis. Uncertainty in relation to the UK-EU trade relationship has increased and US lawmakers have yet to reach an agreement” on a $500 billion relief package which failed to pass the Senate, making a second round of much needed help for Americans unlikely any time soon.
The proposed amount was half of what Republicans had previously pushed for, and a quarter of the Democrats’ plan.
Elsewhere, European stock market operator Euronext is in negotiations with the London Stock Exchange Group to buy the Milan stock market, the companies announced Friday, while Deutsche Boerse added it is also a bidder.
LSEG is prepared to sell the Milan exchange to win approval by the EU Commission of its planned purchase of US financial data provider Refinitiv.
Euronext operates the exchanges of Amsterdam, Brussels, Dublin, Lisbon, Oslo and Paris.
- Key figures around 1600 GMT -
New York - Dow: UP 0.6 percent at 27,707.02 points
London - FTSE 100: UP 0.5 percent at 6,032.09 (close)
Frankfurt - DAX 30: DOWN 0.1 percent at 13,202.84 (close)
Paris - CAC 40: UP 0.2 percent at 5,0346.14 (close)
EURO STOXX 50: UP 0.2 percent at 3,320.37
Tokyo - Nikkei 225: UP 0.8 percent at 23,406.49 (close)
Hong Kong - Hang Seng: UP 0.8 percent at 24,503.31 (close)
Shanghai - Composite: UP 0.8 percent at 3,260.35 (close)
Pound/dollar: DOWN at $1.2783 from $1.2805 at 2110 GMT
Euro/pound: UP at 92.56 pence from 92.26 pence
Euro/dollar: DOWN at $1.1832 from $1.1868
Dollar/yen: UP at 106.18 yen from 106.13 yen
West Texas Intermediate: DOWN 0.4 percent at $37.54 per barrel
Brent North Sea crude: DOWN 0.8 percent at $39.75 per barrel