Following a troublesome Asian session, with the Shanghai Composite Index closing at its worst price in nearly 4 years, the European markets resumed their October losses after the bell.
Thanks to the situation with sterling, the FTSE ended up being one of the better performers. Having initially crept above 7000, the index found itself down 0.1%, returning it back below that key level. The fact the FTSE’s losses weren’t more severely was directly linked to the pound’s early problems.
The currency fell 0.4% against both the dollar and the euro, dropping towards $1.3115 against the former while hitting a 10 day low of €1.336 against the latter. The reason for this decline is hardly a surprise; after last week’s reports of an impending Brexit deal sent sterling higher, the weekend’s developments amounted to a bucket of cold water.
The Irish border remains the biggest problem, with Dominic Raab forced into an unsuccessful last minute trip to Brussels for a (brief) meeting with Michel Barnier to try and hash out an agreement against the backdrop of Theresa May’s political fragility at home. Any delay or disagreement only heightens the chances of a no deal Brexit, hence the pound’s red headache.
As for the Eurozone, the DAX and CAC both slipped half a percent after the bell, hitting 11450 and 5070 respectively. The loss of the CSU’s majority in the Bavarian state parliament has contributed to the decline, alongside the ongoing concerns over the EU-Italy budget showdown/US-China trade war/interest rates (take your pick).
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