FTSE rises despite spanner from the Speaker

The London gauge is trading higher despite high Brexit drama unfolding in the background after Parliament's Speaker John Bercow blocked the Prime Minister’s plan to put her twice-rejected Brexit deal to a third vote Tuesday.

The London gauge is trading higher despite high Brexit drama unfolding in the background after Parliament's Speaker John Bercow blocked the Prime Minister’s plan to put her twice-rejected Brexit deal to a third vote Tuesday. This leaves Mrs May with little to take to Brussels on Thursday when she is due to ask the EU for a delay in Britain’s departure from the EU. While news, fake news and conflicting news are battling it out for investors’ attention, including unconfirmed reports that Jeremy Corbyn is looking to resign from the Labour party leadership, actual company news is helping the FTSE trade higher with copper miner Antofagasta and online retail specialist Ocado leading the way.

Sterling finds even keel

With speculation swirling on whether John Bercow’s decision will make it more likely for Britain to end up in a hard Brexit situation at the end of March or if it will mean that Brussels will try and impose an extended delay on Brexit, the currency market is trying to find its feet. An initial plunge of 1% in sterling/dollar has since reverted into only a minor decline in sterling’s value against the dollar and the currency has steadied to trade in a similar range as on Monday.

Dollar slides ahead of Fed meeting

In contrast, the dollar is lower ahead of the start of the Federal Reserve’s two-day rate setting meeting Tuesday and is losing ground against the euro and the yen. Recent weaker US economic data has lowered the yields on 10-year Treasuries and has made the dollar less appealing to investors. US rate setters are widely expected to stick to their plans announced earlier this year of a much slower pace of rate increases, but given that since their last meeting the labour market showed some weakening while the housing market started overheating, it is possible that the Fed may go back on its plans for two more hikes this year. 

Wall Street is already reflecting some of the rising caution about the state of the US economy with stock markets showing much smaller increases than earlier in the year. The expected resolution of the US China trade talks still has the potential to give US industrials a major jolt, but without it some of the spectacular gains in the second part of last year may become a thing of the past.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.