FTSE-100 drifts amid concerns over Brexit talks and fears for economy as Covid cases rise again

Boris Johnson’s administration looked to have raised the stakes over this week’s post-Brexit trade negotiations

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8 September 2020

The FTSE-100 drifted sideways today as Boris Johnson's Brexit strategy kept traders guessing amid growing fears of a No Deal crash out of the European Union,

After a day of speculation yesterday about just how willing the Government really is to rip up elements of Johnson's previous withdrawal agreement, traders continued selling the pound , dropping it by nearly 1% against the dollar.

Yesterday's sterling fall had the converse effect on share prices which jumped strongly, partly because traders figured a weak pound was good for exporters.

That looked like bounceback from last Thursday and Friday's falls and it remains to be seen whether investors will hold their nerve at those levels, particularly amid media coverage of increasing UK Covid numbers.

After an inital slight rise at the opening of trading, the FTSE-100 slipped back by lunchtime to be down a modest 24.34 points at 5912.95 despite a busy day for corporate news.

There were some big movers in the premier league of stocks. DS Smith surged 7% after the cardboard packaging group reported strong sales during the Covid lockdowns as people ordered in food and shopping.

JDSports impressed with its half-year figures, also boosting shares 7%, while Experian's profits surged thanks to an increase in US mortgage application searches. It rose 2%.

A $1.45 a barrel tumble in the crude price to £40.57 helped do for the FTSE's early rise. Shell and BP, both superheavyweights in the index, fell more than 1%, together wiping eight points off the FTSE. Oil investors HSBC and Barclays also slipped, taking three more points away.

Traders were nervous because tech stocks in the US fell sharply late last week and are in for an extremely volatile time in the coming days.

As the Brexit negotiations resume today, expect many more rocky trading sessions, with leak and counterleak roiling markets ahead of the deal deadline of 15 October.

Japan household spending for July came as a nasty shock for whoever takes over as Prime Minister there. Japanese families were clearly holding onto their cash in July as spending came in down 6.5% on the previous month at a time the government of outgoing Shinzo Abe has been criticised for its handling of the Covid pandemic.

US-China relations continued on their downward trajectory as Donald Trump's electioneering gathered pace. The US President repeated that he wanted to decouple the US economy from China's.

That came as China took a conciliatory action, launching a global security initiative telling Chinese tech firms not to steal data or impair IT infrastructure of other countries. However, as CMC's David Madden puts it: "Trump is likely to be sceptical."

Oil shares will continue responding to the oil price after it fell yesterday on Saudi Arabia's move to drop prices to Asia and the US.

The move was seen as a sign the Saudis are worried about falling demand as Covid-19's second wave hits its client countries.

Closer to home, European Union economic growth for the second quarter came in down 11.4% in figures that precede UK GDP numbers later in the week.

Germany's industrial production is the powerhouse of the region, and the country issued some worrying numbers on that yesterday.

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FTSE-100 drifts amid concerns over Brexit talks and fears for economy as Covid cases rise again

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