The FTSE moved in response to data showing that construction activity in the UK slowed down during the summer to the lowest level in three months. The drop was particularly pronounced because construction work spiked in July as developers were catching up on some time lost earlier in the year caused by bad weather but also comes against a backdrop of an overall slowdown in UK manufacturing.
Property development group Berkeley and house builder Persimmon Homes bore the brunt of the sell-off Tuesday, losing 4.22% and 3.24%, respectively.
Shares in advertising giant WPP were also unloved as the company’s North American sales started to decline. The firm traded 6.5% down towards the close.
Carney willing to stay on as BoE governor
The Bank of England governor Mark Carney has indicated he is willing to stay on in his current position past the June 2019 deadline and help steer the British economy through the choppy waters of Brexit next year.
Carney, who joined the BoE in 2013, was meant to leave his post only a few months after Britain is due to leave the European Union but was asked to stay on to provide some stability in the months ahead. He has been a steady hand at the helm of the Bank not only in terms of monetary decisions but also as a public figure.
He was one of the first high level figures to react after the Leave vote in 2016, reportedly arriving at the Bank at 4am in the morning to prepare a speech that would reassure the financial markets.
The pound was reassured today, though very briefly. Immediately after the news it traded slightly higher but the flow of economic news made sure it slumped back down to trade 0.38% against the dollar. Data over the last few days showed that the pace of growth in UK manufacturing is slowing down, house sales are stalling as are house prices and shop sales are declining.
Even with Carney in place it will be hard for the pound to maintain its strength while the overall economy is slowing down.
US-Canada trade talks to continue Wednesday
The US and Canada are due to restart their collapsed trade talks on Wednesday with the Canadian side bringing in a tougher negotiator to the table to counteract the barrage of threats coming from the US President.
Over the weekend Trump tweeted that if the US doesn’t reach an agreement it considers fair, Canada would be “out” of NAFTA, the trilateral trade agreement which also includes Mexico.
However, any such decision would still have to be approved by Congress which is far from given because many politicians believe that a NAFTA agreement that doesn’t include Canada would be detrimental for the US.
If the two sides manage to reach an agreement this week it would provide some relief to the market and dispel worries about how a broken trade deal would affect North American industries.