Stocks stall ahead of US earnings
On the day that Britain avoided Brexit, for the second time, London stocks are trading slightly stronger but in a somewhat subdued fashion reflecting the temporary respite on the political scene where everybody is gathering breath before the next storm.
With parts of the Tory party infuriated by the Brexit delay there is now talk about a summer leadership contest and mounting pressure on Theresa May to leave her post. Even with the leadership contest there is absolutely no clarity on how this would exactly affect the Brexit process and it is far from clear that the Conservative Party will be able to agree internally on where Brexit should be heading.
Mixed signals dominate FTSE trading
On the FTSE declines from British American Tobacco (LON:BATS) and several metals companies are being balanced out by increases in food, drink and other consumer orientated companies. The market mostly shrugged off the decision from Spanish telecoms firm Telefonica (MC:TEF), the owner of 02, to stop trading its shares in London, although BT did dip slightly after the news. Telefonica argued that the volume of trade does not justify the high costs associated with the listing.
The FTSE’s upward move is also partly subdued because of caution over the oncoming US reporting season due to kick off later today with results from JP Morgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC), to be followed by Citigroup (NYSE:C) on Monday.
Unlike last year when the banks’ earnings showed spectacular increases and heralded a strong set of corporate earnings across US blue chips this quarter is expected to show the first contraction in the S&P 500 index since 2016. The decline in turn could prompt the White House into further measures to protect certain industries and to push for more supportive economic policies.
The dollar is mixed for the moment, losing some ground to the pound, the Canadian and the Aussie dollar but firming against the yen. Sterling is in the doldrums against the euro as the common currency perked up on Brexit being extended till the end of October.
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