FTSE higher pound weakens on Brexit gloom
Whilst Europe and Wall Street headed lower, the UK index was heading for its fourth straight day of gains despite gloomy Brexit headlines and the OECD cutting global growth forecasts.
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Whilst Europe and Wall Street headed lower, the UK index was heading for its fourth straight day of gains despite gloomy Brexit headlines and the OECD cutting global growth forecasts.
The FTSE managed to keep in positive territory thanks in part to strength in tobacco firms and the weaker pound. The pound traded across the session hitting a nadir of $1.3124. Gloomy Brexit headlines continued to eat away at trader optimism. According to the UK Attorney General, returning from Brussels there has been little in the way if progress over changes to the Irish backstop arrangement. Theresa May going back to Parliament empty handed will not only be highly embarrassing but also mean that she is unlikely to get the numbers necessary to push her Brexit deal through. Whilst the pound remains comfortably above the $1.30 support, demand has been weakening over the past few days and we expect it to continue to weaken ahead of next weeks’ vote.
BATS jumps on FDA departure
Tobacco firms were on the front foot after news the Steve Gottlieb, the food and drug commissioner and chief opponent to vaping was stepping down. With one enemy less, British American Tobacco charged up the FTSE gaining 4% across the session. Mr Gottlieb surprise departure is clearly seen as a positive for the tobacco firms, although it does open some uncertainty going forward.
Stocks & dollar slip on growth concerns
Elsewhere in Europe, stocks traded lower across the board after Wall Street opened in the red. Markets just can’t shake off concerns over the health of the global economy, and with good reason. This week China has lowered its growth outlook, Australia missed GDP forecasts and today the OECD cut the global outlook, again. Add into this disappointing US data, no new concrete developments in the US – Sino trade dispute and continued Brexit uncertainty and it is clear that the risks are stacking up.
Dollar dips on weak data concerns
The dollar snapped a 6-day winning streak as traders reacted to worse than expected ADP employment data. Around 183,000 new jobs were added in the private sector in January, this was below the 189,000 estimated. Given the close correlation between the ADP report and the non-farm payroll report due on Friday, dollar trades are seeing it as a good time to book profits. The overriding fear here is that employment growth in the world’s largest economy could be starting to slow. Following the release, the EUR/USD rallied to a session high of $1.1321.
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