Wranglings over the length of the post-Brexit transition period are spooking the UK markets this morning and while the FTSE is just about keeping its head above the water the pound has dropped 1% against the dollar and 1.14% against the euro.
The ink on the ballot papers has barely dried off and Boris Johnson is now more assured of his position in 10 Downing Street but a new set of worries about the UK potentially crashing out of the EU without a trade deal is beginning to complicate things. The Prime Minister wants to add a new clause to the Brexit bill that would limit the transition period to the end of 2020 and would make it impossible to extend the period for up to two years, which is what the current agreement with the EU stipulates. But this could create a situation in which the UK would leave the EU without a trade deal and would be in a far more vulnerable position going forward. Investors are voting with their feet, selling off the most UK-focused stocks such as property firms and local banks.
Oil rallies, helps oil stocks higher
Oil prices have a new bounce in their step helped by the prospect of the Sino-US trade deal and OPEC’s recent decision to cut production for the next six months. Brent crude prices have risen above $65 helping the likes of Shell (LON:RDSa) and BP (LON:BP), oil stocks which pushing to the top of the FTSE gainers this morning. Mining companies and utilities are also gaining ground.
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