The FTSE started the day lower and although it looked as if it would gain some ground during the day the rally was stopped in its tracks as it emerged that the key Brexit vote which was scheduled for Tuesday will not take place.
The vote was meant to be taking place after five days of intense debate in Parliament over Theresa May’s proposed Brexit deal but instead the change of plans ended up with MPs baying for blood including Jeremy Corbyn asking for the PM to “give way.” At the time of writing of the comment, the debate was still raging with no clear indication about where the MPs or the Prime Minister plans to take things next.
Other European markets were also under pressure, with French stocks struggling as protracted violent protests across the country started having an effect on domestic economic growth and German shares under pressure as a domestic power struggle continues over Chancellor Angela Merkel’s party successor.
Wall Street starts day on weaker footing
Wall Street also started the day on a weaker footing as the tensions between China and the US continued unabated. In addition to China investors continue to worry about the state of the US economy – according to all indicators still healthy but potentially about to start growing at a slower pace – and the implications of a potential slowdown for the Federal Reserve’s rate plans for next year.
US job opening data should have been supportive of shares at it showed that the number of new jobs in the US rose in October by just over 7 million, a healthy number indeed particularly because a significant portion of the new jobs were for workers needed to handle rising sales, but this wasn’t enough to stem the growing scepticism in the market that appears to be worsening as the holiday season is getting closer.
The volatility among the main indices could increase even further over the coming days as the volume of trade start gradually declining in the run up to Christmas.
Sterling hit by delayed vote
The currency markets took the news of the delayed Brexit vote even worse than the stock market and the pound dropped to a 20-month low on Mrs May’s plans. Sterling hit a low of 1.2625 against the dollar, down 0.8% and weakened 1% against the euro to 1.1062.
Brexit deal, no-Brexit or hard Brexit – irrespective of the outcome the UK economy is already showing increasing signs of strain primarily because the current uncertainty keeps scuppering new deals and projects.
Britain’s GDP growth slowed down to a meagre 0.4% in the quarter ending in October, down from 0.6% in the three months to September, with lower car sales and a slowdown in manufacturing and construction being the main contributing factors.
While the political ground keeps shifting at its current speed it is difficult to see how businesses will be able to handle this level of uncertainty and make any coherent investment or business plans that would allow growth.
China bans some iPhone models
An ongoing spat over intellectual rights between the US semiconductor maker Qualcomm (NASDAQ:QCOM) and Apple (NASDAQ:AAPL) has taken a nasty turn this week as a Chinese court decided to ban the sales of several iPhone models over the issue. The court order affects from the iPhone 6S to iPhone X models, using older versions of Apple’s iOS operating system.
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