FTSE higher as trade truce optimism still holds
The FTSE and other European gauges are in positive territory this morning, still living off the optimism over the Sino-US trade talks sparked by President Trump’s comments earlier this week, which could see the truce on further tariff increases extended by another two months.
In London software firm Micro Focus International (LON:MCRO) led the gainers with a 10% jump in share prices after the company reported better than expected results.
Pound plunges as Labour resistance builds
The closer the March Brexit deadline gets the higher the tensions in Parliament over the outcome. Up until now it was mostly Theresa May suffering from a deep split in her party over Brexit, but now pressures are building on Labour leader Jeremy Corbyn from anti-Brexit MPs in his party who are threatening to resign unless the Brexit proposal that will be voted on in Parliament on 27 February is also submitted to a referendum.
Only last week Corbyn wrote an open letter to the PM not exactly supporting her but, significantly, not going against her, and leaving the door open for pro-Brexit Labour MPs to vote with Theresa May at the next parliamentary vote.
With both parties beset by infighting and a complete absence of unified fronts the currency markets are struggling to make head or tail of where the situation is actually going. The pound has been choppy this week and after a brief respite overnight it continued to slide to new lows of $1.2822 this morning.
Lack of Germany’s economic growth hits euro
The euro is not faring much better, nudging lower to $1.1261 against the dollar as the German economy avoided a recession by a whisker. GDP growth in Europe’s largest economy was flat in the last three months of 2018 compared with a 0.2% decline in the previous quarter.
For the economy to be officially in recession the country would have to have two consecutive quarters of negative growth, and for the time being Germany is still sailing on the right side of it. However, a slowdown in Chinese demand is taking its toll on German exports while Brexit also has the potential to add to Germany’s woes given that the UK is also a significant buyer of German cars, car parts and machinery.
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