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Markets Subdued As Brexit Delay Looking Likely

Published 23/10/2019, 10:50
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It was one step forward and one step backwards for the Brexit process as yesterday MP’s backed Prime Minister Johnson’s deal, but then rejected the move to approve the plans within three days. It seems as if an extension is likely, which is why sentiment in the markets this morning is subdued.

The slight pullback in sterling is assisting the FTSE 100, as internationally focused firms tend to benefit from a weaker pound. Eurozone equity markets are broadly lower as hopes about getting Brexit wrapped up soon have diminished.

Fresnillo (LON:FRES) shares are in the red this morning after the company cautioned that full-year gold and silver production would be at the lower end of the already lowered guidance. The group confirmed that third-quarter gold and silver production dropped by 7% and 14.5% respectively. The update wasn’t all bad as the company predicts that fourth-quarter silver production will be higher. Fresnillo said it continued to implement their performance improvement plan, which is encouraging as efficiencies should help offset the lower ore grades. The stock has been in a bearish trend since September, and a break below the 600p mark, could pave the way for 569p to be retested.

Vernon Hill, the co-founder plus chairman of Metro Bank (LON:MTRO), will stepdown with immediate effect. Mr Hill clung on through all the turbulence of the past year, but has decided to step aside before the third-quarter results are released after the close of trading today. 19 months ago the share price of the bank was north of 4,000p, while today is it sub 200p. It’s a wonder Mr Hill managed to survive this long in his role, but when it comes to the departure, it’s better late than never. The group needs to overhaul its senior management to shake-off the immense reputational damage it has endured.

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JPMorgan Chase (NYSE:JPM) issued an overweight rating for M&G (LON:MGCI) plus the bank’s price target is 271p. Deutsche Bank (DE:DBKGn) have issued a price target of 300p for the newly-listed investment group.

Ashmore (LON:ASHM) shares are lower this morning after Berenberg cut its price target for the stock to 489p from 506p.

GBP/USD is lower today as it looks likes Brexit will be postponed again. The fact that MPs voted against the programme motion yesterday evening makes it more likely that the UK’s departure from the EU will be pushed back, which is why sterling is a little lower. On the other hand, the prospect of a no-deal outcome appears to be miniscule, which explains why the pound has maintained most of last week’s gains.

Boeing (NYSE:BA) will be in focus today as the group will publish its third-quarter figures before the open of the US market. The company has been shrouded by controversy since the two aircraft disasters earlier this year involving the 737 Max plane. Recently reports emerged that suggested employees of the firm intentionally misled the Federal Aviation Administration about the safety of the aircraft in question. Traders will be listening out for any statements in relation to the outlook or perhaps any provisions that need to be set aside.

We are expecting the Dow Jones to open two points lower at 26,786 and we are calling the S&P 500 down two points at 2,993.

DISCLAIMER: CMC Markets is an execution-only provider. The material (whether or not it states any opinions) is for general information purposes only and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment, or other advice on which reliance should be placed.

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No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction, or investment strategy is suitable for any specific person.

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