By the end of the day, even the weakening pound was unable to keep the index out of the red. US markets fared better however, with the Dow Jones Industrial Average trading up 0.22%, the S&P 500 gaining 0.14% and the Nasdaq up 0.16%.
Positive US economic data generated some upward momentum, but unresolved trade issues between the US and a number of its trade partners prevented the market from a full on rally.
Yesterday’s trade talks between the US and the European Union didn’t yield much by way of results and today US negotiators picked up where they left off with their Canadian counterparts.
Canada in particular is hoping for a speedy resolution of the trade talks, given that around three quarters of its exports go to the US - but the two countries can’t find middle ground on conflict resolution issues, which currently allow Canada to seek outside arbitration in situations like the current one, when the US is imposing additional tariffs on Canadian steel and aluminium imports.
Sterling gives up yesterday’s gains despite strong economic data
After a bright start sterling weakened back below the $1.3 mark against the dollar. This effectively obliterated Monday’s gains, made after the EU Chief Brexit negotiator indicated that Britain could have a Brexit deal in hand within the next two months.
On Tuesday the pound gained some impetus from a strong jobs report, which showed that the UK job market was doing better than expected; with the unemployment rate at the lowest level since the mid-1970s and wage growth nudging back to the levels last seen before the financial crisis.
Nevertheless this was not enough to keep the pound up as Brexit optimism suddenly waned. As the London stock market was about to close the pound was down 0.27% at $1.2991 and at €1.1222 against the euro.
Debenhams shrugs off voluntary arrangement rumours
Sir Ian Cheshire, the chairman of Debenhams, confirmed today that Debenhams will be closing some stores, but denied that this was in response to the voluntary arrangement the company is working on.
The Company Voluntary Arrangement allows a firm to exit leases on properties or renegotiate terms. Many high street names in the UK have opted for a CVA, including brands like Homebase, Mothercare and Carpetright.
Debenhams shares were up over 7% on the day following news that the store has not to date adopted a CVA, although they are well down from their 30 day high of 13.71.
Debenhams rushed out a trading statement on Monday confirming that it would meet analysts’ forecasts for 2017/18. With Sports Direct owner Mike Ashley on the shareholder register, investors were also keeping an eye on the possibility of another acquisition for the retail entrepreneur, along the lines of his House of Fraser coup.
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