While US markets continue to hit new highs, UK stocks seem intent on stepping gingerly (and backwards) into Christmas.
Spread betting quotes suggest the FTSE 100 will slip by 23 points to 6,528 and if the performance of sterling is any indication, the reason for the gloom is the progress – or lack of it – of the Brexit negotiations.
Sterling is down by around half a cent against the US dollar – a currency that itself is under pressure – signifying that the noises coming out of the Brexit talks are not hitting the right note.
“The talks appear to be stuck on some elements of the level playing field, namely around the EU’s €750bn economic recovery plan, as well as the thorny issue of fisheries, and with the European parliament setting a deadline of this Sunday to be able to ratify the current text of a deal, it is possible that 2021 could well see various contingency plans swing into operation, before a final deal can be ratified,” reported Michael Hewson, who believes it is still likely that a deal will be made, albeit not necessarily by Sunday’s deadline.
“PM Boris Johnson went on the record by saying that the EU’s stance on fishing was not reasonable, and that the talks could well founder unless the EU shifted substantially on its current position,” Hewson noted.
As mentioned, US indices broke new ground yesterday with the Dow Jones industrial average rising 149 points to 30,303, the S&P 500 climbing 21 points to 3,722 and the Nasdaq Composite gaining 107 points at 12,765.
Asian markets don’t seem to have got the memo this morning, however, with Japan’s Nikkei down 38 points at 26,769 and Hong Kong’s Hang Seng index 255 points in the hole at 26,423.
In London, the corporate news schedule is one that would be recognised by Old Mother Hubbard but then it is a Friday and we are getting close to Christmas.
On the macro front, the British Retail Consortium’s sales data is slated for release, with economists expecting a 4.1% month-to-month drop in sales volumes.
This survey is skewed towards larger retailers, noted Samuel Tombs at Pantheon Macroeconomics, “who probably will have coped with store closures better than smaller ones”.
He reckons sales volumes will be down 5.5% print for total sales volumes.
There is also a survey from the CBI into the manufacturing industry, due out later in the morning. The previous reading for its measure of the total orders balance, calculated by subtracting the percentage of respondents reporting a decline in orders from the percentage reporting an increase, was minus 40.