China stimulus package boosts FTSE

Domestic economic problems compounded by the ongoing trade war between the US and China are slowly eroding the speed of China’s economic growth and the country’s officials have now decided on a new set of measures to boost that pace including improving credit availability for smaller businesses, increasing investment in infrastructure and a cut in taxes. European markets perked up after the decision with the FTSE gaining around 0.4% in early trade.

Bet makers decline on US Justice Department view

The biggest gainers in London are industrials and manufacturing companies such as Rolls Royce and BAE Systems but miners also gained ground given that China is the single biggest buyer of all base metals. In contrast, book makers Paddy Power Betfair, William Hill, GVC Holdings and 888 Holdings are all sliding this morning after an opinion by the US Justice Department issued Monday signalled possible further restrictions on online gambling while the ongoing Brexit uncertainty is eroding the share prices of home builders, banks and high street chains.

PM speech makes little difference to Brexit expectations

The Prime Minister’s speech to the Commons late Monday, a last ditch attempt to persuade Parliamentarians to vote for her Brexit proposal Tuesday, seems to have done little to shift their opinion. The expectations remain for a resounding defeat on the vote with the twist now that both economists and investors have become less convinced that there will be a hard Brexit and more that there might be a complete U-turn on Britain’s divorce from Europe. Sterling is now reflecting this view, trading 0.3% higher against the euro and 0.1% against the dollar.

If Theresa May’s Brexit proposal is rejected, she will have three days to submit to Parliament a new proposal. In that scenario she is expected to talk to European negotiators on Wednesday to try and get further concessions. If that fails too, a second likely scenario is a European Union Withdrawal Bill Number 2, an idea put forward by three Conservative backbenchers which would give ministers another three weeks to come up with an alternative plan that they could submit to Parliament. But as mentioned the no-Brexit option is gathering momentum although it has not been fully formulated yet by any single group of MPs.

Political uncertainty aside, though the country’s economy is taking a hit from Brexit, it still continues to grow although at a far slower pace than some of its peers. Inflation is now close to the BoE’s target rate of 2% and the bank is widely expected to leave rates unchanged at its next meeting in February.