FTSE higher after EU grant “flextention”
Global equities bonded higher at the start of the new week. European bourses advanced, buoyed by news that the EU had agree an extension to Brexit. This combined with comments from President Trump that he intends to sign a trade deal with China before the APAC meeting later in November has boosted risk sentiment.
The EU agreed to grant the UK an extension to Brexit end of January, meaning that the UK won’t be crashing out of the EU without a deal in place on Thursday. Whilst a no deal Brexit is still considered the least likely option now, there was still an uneasiness that it could happen. Today’s extension by the EU means that the UK has avoided a no deal Brexit, at least for now.
The news came as Boris Johnson prepares to ask the House of Commons for permission to call a general election on December 12th. Boris Johnson needs two thirds of MP’s to back him. He is not expected to achieve those numbers. As a result, the pound is keeping its head above water trading a solid 0.3% higher on the day.
Even if Boris Johnson doesn’t achieve the numbers that he needs in today’s vote, there is still another route to an election which only require a simple majority in the House of Commons. In short, the prospect of a general election won’t have gone away, so the potential domestic political uncertainty could keep the pound from pushing back towards $1.29.
HSBC drops 3.5%
HSBC (LON:HSBA) tumbled to the bottom of the FTSE 100 on the open and spent the rest of the day there. Lower profits, lower revenue and rising costs are supportive of drastic remodelling plans. Further details of the restructuring plans aren’t expected until early next year. However, we can expect a shift in focus towards Asia and away from Europe and US.
S&P hits record high
Over on Wall the S&P hit a record high this afternoon, jumping on the open ahead of a busy week of corporate earnings. The S&P 500 surged after President Trump said that the US is ahead of schedule to sign part of the trade deal with China. The news boosted optimism in the market, lifting riskier assets and weighing on safer havens such as gold and the dollar.
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