New Conservative Brexit pledge dampens excitement
After yesterday’s exuberance, markets were in a more sober mood as cold reality hit and dims optimism in both the UK and US.
UK indices were lacklustre and the FTSE 100 closed up just 6.23 points, or 0.08 per cent at 7,525.28 as traders digested the news that Prime Minister Boris Johnson was planning to set a very tight deadline for the conclusion of Brexit negotiations.
Johnson is hoping that his bill requiring Britain to have a deal by December 2020 with the EU will focus minds and push forward his Brexit agenda. However, critics have said the timetable is too short and there won’t be time for meaningful negotiations in just 11 months. This raises the prospect that Brexit could again be a “cliff edge” and that Britain might depart from the EU on less favourable WTO terms.
After revelling in new-found political certainty yesterday, the markets took the news of the bill to mean that there was further volatility likely in the short to medium term. This coupled with news that Britain’s factories had suffered falling demand, meant both the FTSE 100 was largely flat.
CBI’s survey of UK industrial trends showed that the order books for factories had dropped, while UK labour market figures showed wage growth was slowing.
On Wall Street, the Dow Jones was up 24 points to 28,310 despite a fall in Boeing shares amid news that production of its 737 Max would stop in January 2020. The S&P 500 was up 1 per cent to 3,194.
It was a bad day for the pound – sterling fell against both the dollar and the euro in morning trading as Brexit fears wiped off gains made after the UK General Election on December 12.
On the Asian markets the Nikkei 225 was up 0.47 per cent to 24,066.12. Bitcoin had a flat day, falling 0.44 per cent to 5,201. In dollar terms, Bitcoin fell 1.4 per cent to 6,829. In Zurich the Stoxx 600 index closed down 0.68 per cent at 414.92. Crude oil was up 1.1 per cent up at 60.87 in late UK trading.