FTSE lower as tensions build

The London index is trading lower despite a flurry of company news, with many reporting good growth and higher income. But with Brexit uncertainties in the background, the EU heading for conflict with Italy over its budget and US and Asian stocks falling, investors have greeted even good results with scepticism.

Whitbread shares were hit even though the company reported a slight increase in profit and progress on its Costa Coffee sale. Similarly, Anglo American reported strong third quarter sales but shares decline by 2.2%.

The market is reading the tea leaves ahead of the UK budget next Monday, now expecting that the UK Chancellor may not have to increase taxes to fulfill a government promise to fund the NHS. A revision of the UK deficit is showing a lower-then-expected hole in the country’s finances which would allow the Chancellor to avoid unpopular tax increases. At the same time the UK Brexit Minister is talking to businesses to make them ready for a hard no-deal Brexit. Sterling is performing a precarious balancing act against the dollar and the euro, following a drop to a two week low yesterday.

Euro slips, oil steady

The red in the stock market indices was replicated across Europe with the DAX particularly hard hit in the wake of Germany’s producer price index data. The euro slipped against the yen and the dollar.

Oil prices have stabilised for the moment as the US and Saudi seem to have decided to walk away from a budding dispute over dissident Saudi journalist Jamal Khashoggi but Turkey is unlikely to let the issue lie, given that the journalist was killed in Istanbul. Turkey’s President Erdogan is planning a detailed speech later today that could stir the issue anew.

US corporate calendar overflow

The floodgates are about open for US corporate earnings as some 150 companies are due to report before the end of the week including Caterpillar and McDonald’s today. Many are pegged to report good earnings, boosting hopes that the market will find new impetus to shake off the recent bond-induced gloom.